GM (GM) Q4 Earnings Preview: Continued Growth, but Challenges Remain

Revenue and Earnings Expectations

GM is projected to post $44.46 billion in revenue for the fourth quarter, according to Bloomberg estimates, a rise from the $42.98 billion reported in the previous year's corresponding period. In terms of profitability, analysts anticipate adjusted EPS of $1.83 on adjusted net income of $1.954 billion.

Full-Year Guidance

After announcing Q3 results in late October, GM provided updated full-year guidance:

* Adjusted EBIT: $14 billion to $15 billion
* Automotive operating cash flow: $22 billion to $24 billion
* Adjusted automotive free cash flow: $12.5 billion to $13.5 billion
* Diluted-adjusted EPS: $10 to $10.50

Key Performance Drivers

GM's robust truck and SUV sales, particularly in the US, have been key growth drivers. Q4 sales surged 21% year-over-year and increased 4% in 2024, totaling 2.7 million vehicles. The company's full-size pickup sales reached their highest level since 2007, while full-size SUV sales propelled GM to a dominant position in the category for the 50th consecutive year.

Share Repurchase Program

GM's extensive stock repurchase plans have also contributed to the rise in share price. The company initiated a $6 billion share buyback in June and an accelerated share repurchase (ASR) program worth $10 billion last year.

EV Growth and Challenges

While electric vehicles (EVs) like the Cadillac Lyriq and Chevrolet Equinox EV have garnered strong sales, growth in the segment has been slower than expected. Despite adjusting its EV production volume forecast to 200,000 units, GM remains committed to achieving EV profitability. The company aims to reduce EV costs by $2 billion to $4 billion in 2025.

Business Challenges

GM has also faced headwinds in its autonomous vehicle business and China operations. The company's Cruise business was merged with its in-house autonomous tech group, while a $5 billion writedown was taken on its China joint venture.

Trade and Regional Issues

Investors will scrutinize GM's guidance on ongoing challenges, including trade and regional issues that may impact its business and profitability prospects.

Outlook

Investors will closely monitor GM's Q4 results for insights into the company's ability to sustain its growth trajectory amidst industry headwinds. The company's guidance on EV profitability, autonomous tech, and regional concerns will also be key factors to watch.