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Why Wall Street Expects GM’s Q4 2018 Earnings to Tank

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The trend in GM’s earnings

General Motors (GM) has beaten Wall Street analysts’ consensus earnings estimates compiled by Reuters in all quarters since the first quarter of 2015. However, in the fourth quarter of 2018, the company reported about a 13.3% decline in its adjusted earnings per share (or EPS) to $1.43.

GM has reported a year-over-year increase in its adjusted earnings in only one of the last four quarters. Now, let’s explore analysts’ consensus estimates for GM’s first-quarter earnings.

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Analysts’ estimates for Q1 2019 earnings

In the first quarter, Wall Street analysts expect General Motors’ earnings to continue to fall on a year-over-year basis. According to these estimates, the company’s first-quarter adjusted earnings could be ~$1.11 per share, down about 22.5% from the adjusted EPS of $1.43 in the first quarter of 2018. Going forward in the second quarter this year, analysts expect GM to report $1.68 EPS, down 7.3% year-over-year.

What could hurt earnings?

Since April 2018, General Motors stopped reporting its sales data every month. Ford (F) also followed GM in 2019 and stopped releasing its monthly sales reports after December 2018 while Fiat Chrysler (FCAU), Toyota (TM), and Honda (HMC) continue to report their monthly US sales data.

In the first quarter this year, General Motors’ US market total sales fell 7.0% year-over-year. The company’s key brand, Chevrolet’s, home market sales fell sharply—by 7.8%. Also, General Motors’ Chinese market sales fell 17.5% in the quarter ended in March 2019. These massive drops in the company’s US and Chinese market sales could drive GM’s earnings down in the first quarter.

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