Don’t look now, but General Motors shares have taken off. That puts its fourth-quarter earnings, and management’s forecasts for 2024, front and center for investors.
As of the close on Monday, the stock was up some 26% since mid November, fueled by a new four-year-plus labor deal with the United Auto Workers and plans to raise the dividend. That is better than Ford Motor, Stellantis, and Toyota Motor shares, but those three have all posted positive returns.
Tesla stock has fallen almost 20% over the same span. The S&P 500 is up about 9%.
The kind of outperformance means that investors expect good news when quarterly results come. And good news starts with beating Wall Street’s estimates for earnings. For the fourth quarter, Wall Street expects an operating profit of $1.9 billion and earnings per share of about $1.16 from sales of $39.5 billion, according to Bloomberg.
The results are expected before the market opens on Tuesday.
A year ago, GM reported an operating profit of $2.6 billion and EPS of $2.21 a share from $43.1 billion in sales. U.S. sales volumes were flat year over year in the fourth quarter, but GMC and Cadillac sales dipped 6.5% and 7%, respectively. Those tend to be higher-priced vehicles.
Last summer’s strike against the Detroit Three auto makers ultimately also cost GM roughly $1.3 billion in operating profit, wrote Freedom Capital Markets analyst Mike Ward in an earnings preview report.
Looking ahead, Wall Street is projecting an operating profit of $10.8 billion and EPS of $7.70 for 2024. Any forecasts from GM can be compared with those numbers.
“GM has exceeded initial guidance in the last three years, despite unexpected events each year,” Ward wrote. That is one reason his forecasts for 2024 are above the Wall Street consensus. He projects an operating profit of $12.9 billion and EPS of $9. Ward rates shares Buy and has a $60 price target for the stock.
At the start of 2023, GM told investors to expect $10.5 billion to $12.5 billion in operating profit. GM should hit the low end of that range, despite higher interest rates and the weeks-long UAW strike.
Despite the recent gains, GM stock trades for about 5 times the per-share profit the company is expected to produce in 2024. Traditional auto makers, including GM, don’t trade for big multiples of earnings because investors tend to worry about the cyclicality of their earnings. How companies will navigate the shift to electric vehicles is an additional concern.
The company hosts a conference call at 8:30 a.m. Eastern time to discuss results.
Options markets imply the stock will move about 4%, up or down, following the earnings. Shares have moved roughly 4.5% up or down after the past four quarterly reports. The stock has risen once and fallen three times over that span.
Write to Al Root at allen.root@dowjones.com