General Motors (GM) looks set to report strong earnings growth for Q2 2024

After a positive start to the new fiscal year, General Motors Co. (NYSE: GM) is gearing up to report second-quarter results next week. The market will be closely following the event, looking for updates on the company’s growth strategy and EV production goals.

Currently, the stock is trading at the highest level in more than two years, maintaining an uptrend since the beginning of the year. In the past eight months, the share price has nearly doubled but it is still below the 2022 peak. Last month, the stock got a major boost after the company announced a new $6-billion stock repurchase authorization.

Q2 Report Due

The Detroit-headquartered auto giant is expected to report earnings of $2.72 per share for the June quarter, excluding special items, which represents a significant improvement from the year-ago quarter when it earned $1.91 per share. Analysts project second-quarter revenues of $45.3 billion, up 1.2% year-over-year. The report is slated for release on Tuesday, July 23, at 6:30 am ET.

The GM management raised its full-year earnings guidance a few months ago. The company is in a turnaround phase now, after being hit by macroeconomic uncertainties and stiff competition, especially from EV-focused automakers including Tesla. To deal with the situation, it is ramping up EV production capacity and targets to roll out one million all-electric vehicles in North America by 2025-end.

Road Ahead

In the EV segment, the company is already seeing decent early sales momentum for models like Cadillac LYRIQ. Earlier, it had slashed EV production targets due to the general slowdown in electric vehicle demand in key markets. Meanwhile, the continuing slump in international sales, especially in China, remains a drag on overall performance.

From General Motors’ Q1 2024 earnings call:

“All of our product programs are benefiting from the end-to-end improvements we’ve made in software, including the increased rigor we have instilled in our quality and validation processes. More importantly, the talented executives and engineers we’ve hired from the tech industry are raising the bar for software design and execution, which will help us truly differentiate our customer experience and the suite of software-driven products and services we offer. We’re also making progress at Cruise.”

On Growth Path

In the first quarter, sales at the GM North America segment grew 9% year-over-year, driving up total revenues by 8% to $43 billion. It was well above the consensus estimate. Consequently, adjusted profit climbed 19% annually to $2.62 billion, exceeding Wall Street’s forecast. The company has a good track record of delivering better-than-expected results, with earnings beating estimates almost every quarter in the past decade.

In 2024, General Motors’ stock mostly traded above its 52-week average. On Wednesday, it opened slightly below $50 and traded lower in the afternoon.