General Motors (GM) is expected to outperform its Detroit counterparts, Ford and Stellantis, in their second-quarter earnings reports. Analysts predict that GM will report a solid adjusted profit of $2.75 per share, a 44.2% increase from the previous year, and $45.46 billion in revenue, a 1.6% increase. In comparison, Ford is projected to have adjusted earnings per share of 68 cents, a 5.2% decline, and $44.02 billion in automotive revenue, a 3.8% increase. Stellantis, on the other hand, is facing challenges in its North American operations due to mistakes that have led to sales declines and bloated inventories.
Wall Street analysts expect GM to guide towards the higher end of its already raised guidance for 2024, or even raise it again based on its second-quarter results. Ford’s outlook for the year includes adjusted earnings before interest and taxes (EBIT) of $10 billion to $12 billion and free cash flow of $6.5 billion to $7.5 billion. GM’s guidance for 2024 includes adjusted earnings of $12.5 billion to $14.5 billion and adjusted automotive free cash flow of $8.5 billion to $10.5 billion.
Analysts remain positive on GM, citing the automaker’s lower pricing compared to Ford. Evercore analyst Chris McNally believes that GM will have a solid second quarter, while Barclays analyst Dan Levy expects both Ford and GM to post solid beats for the quarter.
Stellantis, which owns brands such as Jeep and Ram, is expected to report an 11.3% year-over-year decline in revenue. CEO Carlos Tavares acknowledged mistakes made by the company in the North American region, leading to concerns among investors. However, Stellantis’ finance chief Natalie Knight confirmed the company’s 2024 guidance, which includes a double-digit adjusted operating income margin and positive industrial free cash flow.
Investors will be closely watching the automakers’ electric vehicle plans, capital spending, and rising new vehicle inventory levels in the U.S. While the U.S. auto cycle dynamics are expected to support strong earnings streams, rising inventory levels may pressure automaker stocks.
In conclusion, GM is anticipated to have a strong second quarter, surpassing Ford and Stellantis. The automaker’s lower pricing and favorable pricing are expected to contribute to its success. However, challenges remain for Stellantis in its North American operations, while Ford’s outlook for the year is positive but slightly lower than GM’s. Investors will be monitoring the automakers’ electric vehicle strategies and inventory levels closely.
