Will North America Market Push General Motors Growth?

-8.32%
Downside
45.35
Market
41.57
Trefis
GM: General Motors logo
GM
General Motors

General Motors (NYSE: GM), an American auto manufacturer, is set to announce its Q1 2019 results on April 30 2019, followed by a conference call with analysts. The market expects the company to report revenue close to $35.2 billion in Q1 2019, which would be a decrease of 2.5% on a year-on-year basis. The decrease is mainly expected due to the overall slowdown in the global market which will affect the company’s sales volume. Market expectation is for the company to report earnings of $1.11 per share in Q1 2019, lower than $1.43 per share in the year-ago period.

 

We have summarized our key expectations from the earnings announcement in our interactive dashboard – What Has Driven General Motors’ Revenues & Expenses Over Recent Quarters, And What Can We Expect For Full-Year 2019?, In addition, here is more Consumer Discretionary data.

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Key Factors Affecting Earnings:

Revenue expected to fall slightly:

  • After a fall in Q3 2017 the revenue per quarter for General Motors has increased at a steady pace. It has increased from $33.6 billion in Q3 2017 to $38.4 billion in Q4 2018.
  • The increase is mostly attributed to an increase in North America and Financial Services segments, while revenue from China has also increased.
  • Trefis estimates 2019 to see a drop of revenue as the sales volume are expected to be affected by the slowdown in the global auto market .

 

Trend in Expenses:

  • The Operating Expenses have largely moved in line with the Revenue over the quarters.
  • Overall Total Expenses have been strongly affected by Income Tax in Q3 and Q4 2017 wherein the Tax liability was due to change in Tax laws. In 2018 the tax liability declined due to the tax reforms in the US.
  • Overall Gross Margin is expected to increase by approximately 180 basis points as GM also focuses on operational efficiency.

 

Full Year Outlook:

  • For the full year, we expect gross revenue to decrease by 1% to $147.4 billion in 2019. Decrease in revenue is mostly expected from the North America region as the slowdown is expected to cause a drop in sales volume.
  • Gross Profit margin is expected to increase steadily toward and reach around 19.2%.

 

Trefis has a price estimate of $42 per share for General Motors’ stock. The value is based on the expectation that GM will consolidate its North America segment, and further work on improving the operational efficiency of their International operations.

 

 

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