GM’s Stock To Rise On Back Of Earnings Beat?

by Trefis Team
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General Motors (NYSE: GM) is scheduled to report its fiscal Q1 2021 results on Wednesday, May 5. We expect GM to beat the consensus estimates for revenues and earnings. The company has reported better than expected earnings figures in each of the last four quarters while revenue was better than market estimates in three of the last four quarters. In the past year, the company was affected due to various lockdowns across the world due to the pandemic. The sector and the company saw some recovery in the second half of 2020 and we expect the same to drive the first-quarter FY2021 results as well.

Our forecast indicates that GM’s valuation is $68 per share, which is 18% above the current market price of $57. Look at our interactive dashboard analysis on GM’s pre-earnings: What To Expect in Q1? for more details. 

(1) Revenues expected to be ahead of consensus estimates in Q1

Trefis estimates GM’s fiscal Q1 2021 revenues to be around $33.9 billion, just above the $33.5 billion consensus estimate. GM’s revenues of $123 billion for the full year 2020 were well below its 2019 figure, as the whole sector was affected due to the pandemic. GM saw recovery in the second half of 2021 and we expect the momentum generated over the last couple of quarters to continue in the first quarter of FY2021. Overall, we expect revenue of around $124.1 billion in FY2021. Our dashboard on GM’s revenues offers more details on the company’s segments.

(2) EPS likely to beat the consensus estimates

GM’s Q1 2021 earnings per share (EPS) is expected to be $1.15 per Trefis analysis, above the consensus estimate of $0.97. The company’s net income margin slightly rose in 2020 but the the EPS figure fell from $4.57 in 2019 to $4.33 in 2020. The removal of lockdowns and steady growth in the rate of vaccination has contributed to a revival in demand across sectors. Altogether, the company is likely to report an EPS of around $5.45 in FY2021.

(3) Stock price estimate 18% above the current market price

Going by our GM’s valuation, with an EPS estimate of around $5.45 and a P/E multiple of 12.4 in fiscal 2021, this translates into a price of $68, which is 18% above the current market price of $57.

Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year

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