General Motors (GM) and Ford (F) are due to report earnings for the third quarter this week, with supply and demand both a concern after Ford's profit warning. Both GM stock and Ford stock are back above a key short-term level, after coming off earlier October lows.
XInvestors are bracing for the possibility that GM will join Ford with a profit warning.
"GM didn't warn yet … but we believe Ford's warning is likely to be a bellwether event for the industry," Morgan Stanley analyst Adam Jonas wrote in an Oct. 6 note to clients. He added that consensus forecasts are likely to move "materially lower" for both Ford and GM over the next year, citing in part higher input costs amid inflation.
Deutsche Bank's Emmanuel Rosner similarly wrote Oct. 20 that GM faces "increased market nervousness as a result of cross-read from Ford's pre-announcement."
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On Sept. 20, Ford warned on Q3 profits, given thousands of incomplete vehicles and a billion dollars more in unexpected costs amid supply issues and inflation.
Since then, used-car retailer CarMax (KMX) and EV leader Tesla (TSLA) have given weak outlooks for vehicle demand and deliveries, respectively.
Along with earnings, GM and Ford may update investors about demand for new cars and car loans as interest rates continue to march higher. They may also discuss chip and other supply shortages, as well as their ambitious shift to electric vehicles, away from traditional gas and diesel cars, chasing Tesla.
General Motors Earnings
Estimates: Analysts polled by FactSet expect General Motors earnings per share to rise 23% to $1.88 on a 57% revenue bounce to $42.086 billion.
Results: Check back Tuesday before the market open.
Outlook: Wall Street sees full-year GM earnings per share of $6.75, down 4.6% year over year.
In early October, GM delivered a 24% surge in U.S. auto sales for the third quarter, touting "strong customer demand" and "modestly improving" vehicle inventories. But concerns about the auto market and broader economy have continued to grow.
At that time, General Motors also said the launch of three important new EVs in 2023 remains on schedule. Those will include the first all-electric versions of the Silverado truck, Blazer SUV and Equinox SUV crossover, all from its Chevrolet brand, which is known for value.
On Oct. 11, GM announced a new GM Energy business, offering electricity storage and management for homes and businesses. The move sharpened its rivalry vs. Tesla, which has big stakes in energy storage along with leadership in electric vehicles.
GM Stock
Shares of General Motors rose 2.1% to 35.72 on the stock market today, extending Friday's rally above the 21-day moving average. GM stock rose in two of the last three weeks ahead of Q3 earnings, but remains below the 50-day and 200-day lines.
Technically, General Motors stock has a bottoming base with a 42.46 buy point, above the 50-day and 200-day.
Ford Earnings
Estimates: Wall Street sees Ford earnings plunging 47% to 27 cents per share. Revenue is seen rebounding 5% to $37.464 billion.
Results: Check back Wednesday.
Outlook: Wall Street sees Ford earnings of $1.98 per share for the full year, up 24%.
Despite its Q3 warning on Sept. 20, Ford maintained full-year earnings guidance. The automaker grew Q3 U.S. auto sales 16% but delayed deliveries of some of its most profitable vehicles, expecting to complete and ship those vehicles in the current quarter as necessary parts arrive.
Ford Stock
Shares of Ford rose 2.4% to 12.48 Monday, retaking the 21-day average. Ford stock also advanced in two of the last three weeks ahead of Q3 earnings, while also continuing below the 50-day and 200-day lines.
Auto supplier Dorman Products (DORM) plunged 6.8% Monday despite an earnings and revenue beat. Allison Transmission (ALSN) and Gentex (GNTX) also report later this week.
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