uploads///GM Revenues

Analyst Estimates Suggest Limited 2016 Growth for General Motors

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Jan. 26 2016, Updated 6:52 p.m. ET

Revenue estimates

Analysts are estimating General Motors’ (GM) revenues to be $39.0 billion in 4Q15. That’s 2% lower than the same quarter last year. Analysts estimate 2015 revenues to be around $151.3 billion, about 3% lower than the previous year.

Although the company’s recent performance in the North American region has been good, its revenues have been hurt by a rising US dollar and falling shipments outside North America. Note that US automobile sales were at their historically highest levels last year. In this article, we’ll take a look at some factors that may drive General Motors’ 2016 revenues.

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Revenue growth: 2016 and beyond

For 2016 and 2017, analysts are estimating General Motors’ global revenues to witness moderate growth at a rate of 0.3% and 1.2%, respectively. This compares to a -3% growth expected for 2015.

Along with analysts’ recommendations, it’s also important for investors to pay attention to these revenue estimates. They may reflect market expectations from the company. These estimates can also serve as a proxy for what might be priced into the market.

Currency headwinds

General Motors is the largest US automaker (FXD) with nearly 35% of its total revenues from North America. The company receives its remaining revenues from other geographical markets, which makes it more vulnerable to a high foreign currency exposure risk.

In 4Q15, a stronger US dollar stole nearly $2.8 billion from the company’s revenues. This adverse currency movement along with the company’s plans to cut its fleet sales further could be seen as reasons for analysts to keep their estimates for GM’s 2016 revenues low.

Note that the strength of the US dollar has also trimmed revenues for Ford (F) in recent years. Automakers based outside the United States include Fiat Chrysler Automobiles and Toyota Motor (TM). They benefited last year from the favorable movement in the currency market—weakening the euro and the Japanese yen, respectively.

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