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General Motors Co. is slated to report second-quarter earnings before the bell on Tuesday, with Wall Street expecting an update about the carmaker’s electric vehicles and a potential outlook raise.
GM
GM,
raised its 2023 profit outlook in April, and now a potential full-year guidance raise could also be in the works, thanks to “rebounding volumes and moderating inflationary pressures,” CFRA analyst Garrett Nelson said.
Overall, the April-June period is likely to be “solid” for GM, with some concern, however, for the longer term, Nelson said.
Related: Tesla reports 47% rise in sales for its second quarter, but profitability shrinks
“Growing signs of EV market oversaturation could spell disaster for GM’s aggressive EV growth strategy,” he said. “Dealer lots are flush with EVs that few are interested in buying despite aggressive discounting, all before GM’s first Ultium battery model rolls off the production line.”
Here’s what to expect:
Earnings: Analysts polled by FactSet expect GM to report adjusted earnings of $1.87 a share on Tuesday. That would compare with earnings of $1.14 in the second quarter of 2022.
Estimize, which crowdsources estimates from sell-side and buy-side analysts, fund managers, academics and others, expects GM to report earnings of $1.96 a share.
Revenue: The analysts surveyed by FactSet see GM’s revenue at $42.1 billion, compared with $35.8 billion in the year-ago quarter. The Estimize call is for revenue of $41.9 billion.
Share movement: Shares of GM have gained 17% so far this year, compared with an advance of about 19% for the S&P 500
SPX,
That slight underperformance holds for the share movement in the past three months, with GM’s stock down 2% and the S&P gaining 2.4%.
What else to expect: Karl Brauer with iSeeCars.com said he expects GM to show improved sales for traditionally powered cars through the second half of the year, boosting profit as demand for internal-combustion vehicles remains “robust.”
What happens in the second half of the year warrants attention.
There are signs that demand could slip in the second half, “making future sales and earnings estimates much more challenging,” he said. “At the very least I expect price cuts to expand beyond EVs and creep into gasoline vehicles over the next six to 12 months.”
Analysts at Evercore ISI also said they expect “another very strong” quarter for GM, but one that is mostly “well anticipated” by Wall Street given GM’s recent sales and production numbers.
“We continue to believe the stock is rangebound between low $30s and low/mid $40s,” because even as prices are holding “higher for longer,” they said, “headwind will always be coming.”
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