General Motors (NYSE:GM) shares fell more than 5% following the announcement of its second-quarter results, which surpassed analyst expectations on both earnings and revenue fronts.
The automotive giant reported an adjusted EPS of $3.06, notably higher than the consensus estimate of $2.71. Revenue for the quarter also exceeded forecasts, coming in at $47.97 billion against an anticipated $45 billion.
The company's robust performance has prompted an upward revision of its full-year 2024 earnings guidance. GM now projects an adjusted EPS range of $9.50 to $10.50, an increase from the previously forecasted range of $9.00 to $10.00.
This updated guidance reflects GM's confidence in its operational execution and market strategy.
In a letter to shareholders, GM highlighted the company's strong second quarter and first half, attributing the success to a high-performing portfolio of ICE trucks and SUVs in North America, encouraging early sales results from its EV portfolio, and stable pricing with lower incentives than the industry average.
The company also emphasized the company's disciplined approach to volume growth and its commitment to achieving positive variable profits from its EV portfolio by the fourth quarter.
The company's updated full-year guidance includes net income attributable to stockholders between $10.0 billion and $11.4 billion, an EBIT-adjusted range of $13.0 billion to $15.0 billion, and an adjusted automotive free cash flow between $9.5 billion and $11.5 billion.
Capital spending is anticipated to be between $10.5 billion and $11.5 billion, inclusive of investments in battery cell manufacturing joint ventures.
GM's positive outlook is further bolstered by strategic leadership appointments at Cruise, its autonomous vehicle subsidiary, and a shift in focus to the next-generation Chevrolet Bolt, which is expected to streamline the path to scale and optimize resources.
Following the results, analysts at Citi said that at first glance, it was "another strong quarter" supportive of the bank's thesis (Top Pick, Buy rating) and $96 target.
"Two takeaways from the updated guide: (1) EBIT-adj. raise consistent with our thinking, but as noted in our preview, will draw focus on the H2 vs. H1 optics with H2 EBIT-adj. implied at $5.7bln our $5.9bln," wrote the bank. "Given GM’s momentum and upcoming CMD, we view the guide as conservative but look for more details on the call. (2) FCF raise a positive surprise—suggesting greater H2 buyback potential vs. our model (~$6bln vs. our $3bln)."