General Motors Stock To Gain Post Earnings?

GM: General Motors logo
General Motors

General Motors (NYSE: GM) is scheduled to report its fiscal Q2 2021 results on Wednesday, August 4. We expect GM to beat the consensus estimates for revenues but fall slightly short on 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 two of the last four quarters. In the past year and a half, the company was affected due to various lockdowns across the world due to the pandemic. The Automotive sector is currently also affected by the global shortage of semiconductor chips which is affecting production across the world.

Our forecast indicates that GM’s valuation is $70 per share, which is 26% above the current market price of $55. Look at our interactive dashboard analysis on GM’s pre-earnings: What To Expect in Q2? for more details. 

(1) Revenues expected to be ahead of consensus estimates in Q2

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Trefis estimates GM’s fiscal Q2 2021 revenues to be around $33.7 billion, above the $29.1 billion consensus estimate. GM’s Q1 2021 revenues were recorded at $32.5 billion, in line with the same period of the previous year as the company continues its recovery. We expect the momentum generated over the last few quarters to continue in the second quarter of FY2021. Overall, we expect revenue of around $136.5 billion in FY2021. Our dashboard on GM’s revenues offers more details on the company’s segments.

(2) EPS likely to miss the consensus estimates

GM’s Q2 2021 earnings per share (EPS) is expected to be $1.27 per Trefis analysis, just below the consensus estimate of $1.34. The company’s net income margin rose slightly in 2020, which we expect to continue in 2021. 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 $5.88 in FY2021.

(3) Stock price estimate 26% above the current market price

Going by our GM’s valuation, with an EPS estimate of around $5.88 and a P/E multiple of 11.9 in fiscal 2021, this translates into a price of $70, which is 26% above the current market price of $55.

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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