Rising Volumes And Cooling Inflation Will Drive GM’s Q2 Results

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General Motors

General Motors (NYSE:GM) is expected to publish its Q2 2023 results on July 25, reporting on a quarter that saw the company’s U.S. deliveries continue to witness strong gains. We expect revenue for the quarter to come in at about $42.3 billion, slightly ahead of consensus estimates and up 17.5% versus last year. We expect earnings to stand at about $1.81 per share, slightly ahead of consensus estimates. See our analysis of GM Earnings Preview for a closer look at what to expect from GM stock for the quarter.

Although the macro picture is looking a bit more challenging for the automotive industry, due to rising interest rates, stricter credit standards, and concerns about the U.S. economy and consumer spending, GM’s delivery performance over Q2 was solid.  U.S. volumes rose by almost 19% from a year ago, to 691,978 vehicles as semiconductor supply improved and supply chain issues eased. Moreover, demand from fleet customers has also remained robust this year so far. That said, GM’s EV sales are stagnating. The company delivered just about 15,652 electric vehicles over Q2, marking a decline from around 20,000 units in Q1. This is likely due to the company facing issues with scaling up the production of newer EVs such as the GMC Hummer and Cadillac Lyriq, with older models like the Bolt dominating its EV shipments. We expect GM’s margins for the quarter to be aided by stronger volume and cooling inflation. That said, this could be partly offset by weaker-year-over-year sales of GM’s full-size trucks.

GM stock has fared relatively well this year, rising by about 19% year-to-date, outperforming the S&P 500 We still think the stock is a reasonably good value at current levels of about $40 per share. GM trades at under 6x the upper end of its projected 2023 net income levels. GM also appears optimistic about its long-term prospects, previously noting that it intends to roughly double revenue to between $275 billion and $315 billion by 2030, compared to about $157 billion in 2022, driven in part by growth in EVs, software, and self-driving technology. The company also intends to expand margins to between 12% to 14%. We remain bullish on GM stock with a $45 price estimate, which is 10% ahead of the current market price. See our analysis on General Motors Valuation: Expensive Or Cheap for more details on what’s driving our price estimate for GM. For more information on GM’s business model and revenue trends, check out our dashboard on General Motors Revenue: How GM Makes Money.

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Returns Jul 2023
MTD [1]
2023
YTD [1]
2017-23
Total [2]
 GM Return 4% 19% 15%
 S&P 500 Return 1% 17% 101%
 Trefis Multi-Strategy Portfolio 4% 24% 299%

[1] Month-to-date and year-to-date as of 7/17/2023
[2] Cumulative total returns since the end of 2016

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