Can General Motors Beat Consensus For FY 2019?

February 3rd, 2020 by Trefis Team
-7.60%
Downside
44.99
Market
41.57
Trefis
GM: General Motors logo
GM
General Motors

General Motors (NYSE: GM) is slated to release its Q4 and full-year 2019 results on February 5, 2020. We believe that General Motors’ Revenues will beat consensus while earnings will miss consensus. We expect General Motors to report revenues of $141.9 billion (vs. consensus estimate of $139.8 billion), which would be 4.8% lower than the previous year primarily due to the global auto slowdown. Earnings are likely to be around $4.36 (vs. consensus estimate of $4.82), lower than $5.53 reported in 2018, due to a lower net income margin. Our forecast indicates that General Motors’ Valuation is $47 per share, which is higher than its current market price of roughly $33.

 

A] Revenue Expected To Beat Consensus

  • Total revenues increased from $147.4 billion in 2017 to $149.1 billion in 2018 with the increase primarily coming from GM Financial segment.
  • Trefis estimates General Motors’ revenues to falter by 4.8% to $141.9 billion in 2019 from $149.1 billion in 2018.
  • Revenue fall is expected to be primarily due to the global auto slowdown.
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A separate interactive dashboard for General Motors’ provides an in-depth view of General Motors’ revenue trend and segment-wise revenue performance, along with forecast for 2019 and 2020.

B] EPS Expected To Miss Consensus

  • General Motors’ 2019 earnings per share (EPS) is expected to be $4.36 per Trefis analysis, lower than the consensus estimate of $4.82 per share.
  • A higher fall in Total Revenue compared to the decrease in expenses will drive the reduction in earnings compared to 2018.
  • As we forecast General Motors’ Revenues to fall and Expenses to fall slower in 2019 (-4.9% vs -4.1%), this will result in a fall in General Motors’ Net Income Margin figure from 5.3% in 2018 to 4.5% in 2019.

C] Stock Price Estimate higher than Market Price

  • A trailing P/E multiple of 10.8x looks appropriate for General Motors’ stock, which is higher than the current implied P/E multiple of 6.8x.
  • As per Trefis, General Motors’ 2019 revenue will be higher than the market expectations and earnings are expected to be lower than consensus. This forecast works out to a fair value of $47 for General Motors’ stock, which is higher than its current market price of around $33.

Additionally, you can input your estimates for General Motors’ key metrics in our interactive dashboard for General Motors’ pre-earnings, and see how that will affect the company’s stock price.

 

 

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