General Motors (GM) Down 11% Since Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for General Motors Company (NYSE:GM) . Shares have lost about 11% in that time frame.

Will the recent negative trend continue leading up to its next earnings release, or is GM due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

General Motors' Q4 Earnings, Revenues Beat Estimates

General Motors reported fourth-quarter 2017 adjusted earnings per share of $1.65, up 21.3% from that of prior-year quarter. The bottom line comfortably beat the Zacks Consensus Estimate of $1.34.

General Motors reported revenues of $37.7 billion, reflecting a decline of 5.5% from the year ago quarter. However, revenues surpassed the Zacks Consensus Estimate of $33.3 billion.

For any fourth quarter, adjusted EBIT set a record. This was aided by sales of crossovers, strong pricing and cost-control initiatives, which were partly offset by a wholesale volume decline.

For full-year 2017, adjusted earnings came in at $6.62 per share, up 8.2% from that of prior-year quarter. Revenues were $145.6 billion during the year, down 2.4% from that of 2016 figure.

During the quarter, total wholesale unit sales declined to 1.24 million vehicles from 1.41 million in the fourth quarter of 2016. Worldwide retail unit sales decreased to 2.59 million vehicles from 2.85 million in the year-ago quarter. The automaker’s global market share was 10.3% during the reported quarter, reflecting a decline from 11.4% in the year-ago quarter.

Segment Results

GM North America (GMNA) generated net sales and revenues of $28.8 billion during the fourth quarter of 2017, down from $31.3 billion in fourth-quarter 2016.

GM International (GMI) net sales and revenues came in at $5.7 billion, declining from $6 billion in the year-ago quarter.

GM Financial generated net sales and revenues of $3.23 billion during the quarter, reflecting an increase from $2.6 billion in the year-ago quarter.

Financial Position

General Motors had cash and cash equivalents of $15.5 billion as of Dec 31, 2017 compared with $12.6 billion as of Dec 31, 2016.

Adjusted automotive free cash flow during the quarter came in at $4.2 billion, up $1.7 billion from fourth-quarter 2016.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter. In the past month, the consensus estimate has shifted downward by 11.5% due to these changes.

General Motors Company Price and Consensus

General Motors Company Price and Consensus | General Motors Company Quote

VGM Scores

At this time, GM has a great Growth Score of A, though it is lagging a lot on the momentum front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Based on our scores, the stock is equally suitable for value and growth investors while momentum investors may want to look elsewhere.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, GM has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.