GM Poised for Continued Strong Performance in Q4, Despite Challenges

Quarterly Earnings Preview

Investors eagerly anticipate General Motors' (GM) fourth-quarter results, scheduled for release on Tuesday morning. The automaker's strong momentum in 2024, driven by robust truck and SUV sales and a surprising EV surge, propelled its share price by 48%.

Analysts forecast GM to report revenue of $44.46 billion for the quarter, surpassing the $42.98 billion recorded in the previous year. Adjusted earnings per share (EPS) is estimated at $1.83, generating adjusted net income of $1.954 billion.

Full-Year Guidance

Following Q3 results, GM updated its guidance for 2024:

* 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

Sales Performance and Share Repurchases

GM's profitability gains can be attributed to its exceptional sales performance, particularly in the US. Q4 sales surged 21% year-over-year and 4% in 2024 to 2.7 million vehicles. Full-size pickup sales reached their highest level since 2007, while full-size SUV sales propelled GM to a 50-year segment reign.

Aggressive stock repurchase plans have also contributed to the company's rising share price. GM's recent $6 billion buyback plan complements its $10 billion accelerated share repurchase program, launched in 2023 alongside a 33% dividend increase.

EV Growth and Outlook

GM's EVs, such as the Cadillac Lyriq and Chevrolet Equinox EV, have gained traction in the market. However, growth has not met initial projections. CFO Paul Jacobson has emphasized the company's target of achieving positive EV variable profit margins.

Despite scaling back its production forecast to 200,000 units, GM plans to reduce EV costs by $2 billion to $4 billion in 2025. The company anticipates significant EV EBIT improvement in the coming years.

Challenges and Guidance

GM faced challenges in 2024, including the wind-down of its Cruise autonomous business and a $5 billion writedown in its China operations. Investors will await updates on GM's EV and self-driving technology strategies, as well as the impact of trade and regional issues.