General Motors shares gain the most in five months on Wednesday, quarterly earnings surge past estimates, auto maker expects strong full-year results

November 1, 2018 8:31 am

General Motors Company’s (GM) quarterly earnings, reported on Wednesday, easily topped Wall Street estimates, supported by strong demand in North America. The auto maker also said it now expected full-year profit to come in at the high end of its forecast.

General Motors shares closed higher for a fifth consecutive trading session in New York on Wednesday. It has also been the sharpest daily surge since May 31st. The stock went up 9.09% ($3.05) to $36.59, after touching an intraday high at $37.05, or a price level not seen since August 30th ($37.06).

Shares of General Motors Company have retreated 10.73% so far in 2018 compared with a 1.43% gain for the benchmark index, S&P 500 (SPX).

In 2017, General Motors’ stock surged 17.65%, thus, it again underperformed the S&P 500, which registered a 19.42% return.

GM’s total revenue went up to $35.79 billion during the third quarter, from $33.62 billion in the year-ago period. In comparison, analysts on average had expected revenue of $34.85 billion.

Vehicle sales volume shrank 14.7% during the latest quarter from a year ago, as lower sales were registered across every region and every brand, the largest US auto maker said.

GM’s operating profit in North America was reported at $2.8 billion during the past quarter. Pricing in the region registered a third-quarter record of over $36 000 per vehicle, or an increase by $800 per unit in comparison with the same period a year earlier. Sales of large SUVs such as Chevrolet Tahoe, Suburban and GMC Yukon surged 12% year-on-year, GM said.

At the same time, GM International reported $139 million in operating earnings during the third quarter, supported by a record equity income in China of nearly $500 million, regardless of slowing demand in the country.

Meanwhile, GM reported a net income of $2.53 billion ($1.75 per share) during the third quarter, after posting a loss of $2.98 billion ($2.03 per share) during the same period a year ago because of a Europe-related charge.

GM’s earnings per share, excluding special items, were reported at $1.87 during the latest quarter, which far exceeded the median analyst estimate pointing to adjusted earnings of $1.25 per share.

“Our disciplined approach to the U.S. market, combined with strength in China and further growth of GM Financial, drove a very strong quarter,” Dhivya Suryadevara, GM’s Chief Financial Officer, was quoted as saying by CNBC. “We will continue to take actions to mitigate headwinds including foreign currency volatility and commodity costs.”

The company said it still expected full-year earnings within the range of $5.80 to $6.20 per share. However, earnings are now projected to come in at the high end of the forecast range.

According to CNN Money, the 21 analysts, offering 12-month forecasts regarding General Motors Company’s stock price, have a median target of $45.00, with a high estimate of $60.00 and a low estimate of $33.00. The median estimate represents a 22.98% upside compared to the closing price of $36.59 on October 31st.

The same media also reported that 11 out of 23 surveyed investment analysts had rated General Motors Company’s stock as “Buy”, while 9 – as “Hold”. On the other hand, 1 analyst had recommended selling the stock.

Weekly Pivot Levels

By using the traditional method of calculation, the weekly levels of importance for General Motors Company (GM) are presented as follows:

Central Pivot Point – $32.03
R1 – $33.50
R2 – $34.35
R3 – $35.82
R4 – $37.29

S1 – $31.18
S2 – $29.71
S3 – $28.86
S4 – $28.01

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