What investors should know before Tuesday’s fourth-quarter earnings
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Mary Barra, General Motors CEO, speaks at the General Motors Factory Zero electric vehicle assembly plant in Detroit on November 17, 2020.
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DETROIT – General MotorsThe market will close on Tuesday and the company is expected to post a fairly positive fourth-quarter profit. It caps off an incredible year filled with supply chain challenges that are still lingering in 2022.
Wall Street analysts believe that Detroit Automaker will post $1.19/share in adjusted earnings, and $34 Billion in revenue according to Refinitiv’s estimates. This would result in a 9.3% drop in revenue compared to a year ago, due to constrained production. an ongoing global shortage of semiconductor chips.
GM’s fourth-quarter adjusted EPS should be at its lowest point of the year and will fall from $1.93 for the fourth quarter in 2020.
Investors will continue to monitor GM’s quarterly results. However, investors are most interested in this year’s guidance and insights into outside factors that might impact the company in 2022.
These issues are just a few of the many things that investors need to know before GM releases its fourth quarter results on Tuesday.
Guidance
Wall StreeT is waiting for youGuideline for 2022 by a company. The automotive industry is expected to have a challenging but positive year due to the lack of semiconductor chip technology and inflation.
In an investor note, Joseph Spak from RBC Capital said that earnings last quarter “will be a backseat to 2022 guidance”, which we anticipate to be around or lower than current expectations for the start of the year. While we are closer to a consensus on the importance of positoning, it could also be an opportunity for us to clear our path for playing autos in volume recovery.
Paul Jacobson, GM CFO, told Credit Suisse investors in December that the company expected to be able to meet its financial goals. “another strong year”In 2022.
Wall Street analysts believe that GM and the other automakers will be cautious in their earnings guidance for this year. This is a continuation of a trend started in 2021.
According to FactSet’s average estimates, analysts expect GM to earn $6.93 per shares in 2022. This is compared to the expectations of $6.83 for 2021, which includes $5.67 per Share through the first three months of 2021.
Qu4 earnings
Jacobson stated that fourth quarter results had been better than anticipated and raised GM’s forecasted adjusted earnings for December year to about $14 billionThe range from $11.5 billion to $1.3 billion was increased to reflect the increase in guidance.
Wall Street analysts and investors were pleased with the new guidance. Analysts had been disappointed that executives claimed the company would achieve the “highest end” of its guidance range in October when the company announced the third quarter results.
GM gave an initial estimate of adjusted earnings for this year, which was somewhere between $10 billion and $11 billionAs it attempted to project the effects of the continuing shortage of semiconductor chips.
GM reported a pretax adjusted profit of $3.7B in the fourth quarter of 2020. During that quarter, revenue was $37.5 million.
Chips
Jacobson used solid vehicle pricing and resilient consumer demand to increase the guidance of the automaker. He also cited an improved supply of semiconductor chip chips. He said that GM does not expect its vehicle inventories to increase to a normal level until 2022.
Jacobson stated that he expects to see the first quarter being similar to the fourth quarter, and then stabilizing and improving throughout the second half 2022. Jacobson also said that this is how Jacobson views his budget and plans moving forward.
This caused GM to reduce its annual U.S. sales of new vehicles due to the parts issue to decline by 12.9%Last year, it was 2.2 million.
Jacobson stated that GM wants to reach a “normalized production rate” by 2022. This will be followed by a normal inventory level.
Outside factors
The global auto industry will continue to be affected by inflation, rising interest rates, and other external factors like commodity costs in 2022. How these factors will impact GM’s business in 2022 are topics investors will care about.
John Murphy, BofA Securities Analyst said recently that one of the biggest risks to volume forecasts was the uncertainty in the economic climate and consumer confidence.
Elaine Buckberg was GM’s chief economic economist and called inflation the “biggest cloud” on the horizon for the economy last month. the Detroit Free Press.
Buckberg stated that the automaker anticipates an increase in interest rates as the Federal Reserve normalizes its policy.
After GM shares rose 40% in 2021 they fell 10% in January. Stock closed Monday at $52.73/share, an increase of 5%
– CNBC’s Michael BloomThis report was contributed by you.
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