6 Feb

General Motors Stock Rises on Q4 2018 Earnings Beat

WRITTEN BY Jitendra Parashar

General Motors

On February 6, General Motors (GM) reported its fourth-quarter earnings before the market opened. In the fourth quarter, the company managed to beat analysts’ estimate of $1.22 by a wide margin. General Motors reported an adjusted EPS of $1.43. The EPS drove optimism among investors and pushed General Motors stock higher. Let’s take a quick look at some other key highlights in General Motors’ fourth-quarter results.

General Motors Stock Rises on Q4 2018 Earnings Beat

Other key highlights

For fiscal 2018, General Motors’ adjusted EPS was $6.54—down 1.2% YoY (year-over-year). The company beat analysts’ estimate of $6.31 per share. Despite the recent decline in General Motors’ market sales in China, its equity income from China was strong at $2 billion in 2018.

In the fourth quarter, General Motors’ total revenues rose 1.8% YoY to $38.4 billion. The company’s adjusted EBIT margin fell to 7.4%—compared to 8.2% a year ago. Weaker Chinese sales, higher raw material costs, and foreign exchange acted as headwinds for the company’s profitability in the fourth quarter. Solid US demand for pickup trucks helped General Motors protect its profitability.

Going forward in 2019, General Motors expects its EPS to remain between $6.50 and $7.00 per share, which reflects an improvement compared to 2018. The company’s fourth-quarter earnings beat and its strong 2019 outlook could have caused its stock to increase after the earnings announcement.

In 2018, General Motors stock fell 18.4% compared to a 6.2% fall in the S&P 500 Index (SPY). Other auto companies including Ford Motor Company (F), Fiat Chrysler Automobiles (FCAU), Toyota (TM), and Honda (HMC) fell 38.1%, 18.9%, 8.7%, and 22.4%, respectively. In contrast, Tesla (TSLA) rose 6.9% last year.

On February 6 at 10:48 AM EST, General Motors was trading with 1.7% gains despite a 0.2% drop in the S&P 500 benchmark.

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