On Thursday, General Motors (NYSE:GM) saw its stock price target increased to $54.00 from $52.00, while its stock rating was maintained at Buy by a market analyst. This adjustment follows the automaker's announcement earlier this week of a significant rise in its second-quarter profits, surpassing analysts' expectations.
General Motors reported an adjusted net profit of $3.51 billion, or $3.06 per diluted share, for the second quarter of 2024. This result shows a substantial improvement from $2.65 billion, or $1.91 per diluted share, recorded in the same period last year. The earnings per share (EPS) for the quarter not only exceeded the predicted $2.21 but also outperformed the consensus estimate of $2.68.
The increase in earnings is attributed to higher revenue and margins in GM's North American operations, improvements in fixed cost management, and a reduction in vehicle incentive programs. Notably, these incentives were 150 basis points below the industry average.
In response to the strong financial performance, General Motors has revised its forecast for the remainder of 2024. The company now expects EPS to be between $9.50 and $10.50, an increase from the previous range of $9.00 to $10.00.
Moreover, the adjusted earnings before interest and taxes (EBIT) projection has been raised to between $13.0 billion and $15.0 billion, up from the earlier estimate of $12.5 billion to $14.5 billion. Capital expenditure forecasts remain unchanged at $10.5 billion to $11.5 billion.
Following these developments, the analyst has also revised the EPS estimate for General Motors for the full year of 2024 to $10.00, up from the previous estimate of $9.50. The current guidance for 2024 by the company is an EPS of $9.57.
In other recent news, General Motors Co (NYSE:GM)'s self-driving technology division, Cruise, intends to resume its fully autonomous vehicle services later this year and start charging passengers for rides by early 2025. The focus has shifted to the next-generation Chevrolet Bolt after plans for the Origin vehicle were halted. Despite a setback last year when a robotaxi collided with a pedestrian, the company remains committed to its autonomous vehicle services.
In financial news, the company reported a strong second quarter with earnings before interest and taxes (EBIT) of $4.4 billion, surpassing estimates. This performance led JPMorgan to raise GM's price target to $61, maintaining an Overweight rating. Revenue also increased by 7% to $48 billion, attributed to strong sales in ICE trucks and SUVs, and a growing market share in the electric vehicle (EV) segment.
However, Morgan Stanley has adjusted its stance on GM, downgrading the stock from Overweight to Equalweight and slightly increasing the price target to $47. The firm sees a "balanced" risk-reward scenario for the automaker, reflecting industry challenges and the stock's recent rally. These recent developments underscore GM's commitment to its investors and its confidence in ongoing performance.
InvestingPro Insights
Following the positive earnings report and the upward revision of General Motors' (NYSE:GM) price target by market analysts, InvestingPro data further bolsters confidence in the automaker's financial health. General Motors is trading at a highly attractive P/E ratio of 5.03, which is even more compelling when considering the adjusted P/E ratio for the last twelve months as of Q2 2024 at 4.45. This suggests that the company's stock may be undervalued relative to its earnings growth.
The company's market capitalization stands at a robust 50.04 billion USD, and with a PEG ratio of just 0.21 for the same period, GM appears to be positioned for growth at a rate that far outpaces its earnings multiple. The revenue growth of 4.93% for the last twelve months as of Q2 2024 also indicates a steady upward trajectory. These metrics, when coupled with the fact that GM has been a prominent player in the Automobiles industry and has seen a large price uptick of 32.97% over the last six months, paint a picture of a company on the rise.
InvestingPro Tips highlight that management's aggressive share buybacks and the upward earnings revisions by 8 analysts for the upcoming period reflect a strong vote of confidence in General's Motors future prospects. Moreover, the company has been profitable over the last twelve months, reinforcing the optimistic outlook.
For those interested in a deeper dive into General Motors' financial landscape, InvestingPro offers additional insights and tips. Readers can take advantage of the exclusive coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, and explore the 9 additional tips available on InvestingPro that could further inform investment decisions.
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