Investors may be taking a fresh look at General Motors GM) and Ford Motor’s F) stock after their stronger-than-expected Q1 earnings and upgraded guidance.
GM topped Wall Street’s EPS expectations yesterday evening, and Ford followed suit with its own earnings beat after-market hours on Wednesday.
Both automakers delivered earnings beats that signaled stronger profitability, healthier margins, and early traction in their efforts to balance EV investments with resilient combustion-engine demand.
Tariff Refunds Boost GM & Ford’s Q1 Results
Despite higher EV-related costs and modest revenue softness, GM’s operational performance, strategic positioning, and digital services drove a standout quarter. Impressively exceeding earnings expectations, GM’s Q1 EPS came in at $3.70, nearly 42% above estimates of $2.61 and spiking from $2.78 per share in the prior year quarter.
GM’s outperformance was attributed to a $500 million tariff-related benefit from a Supreme Court decision, and strong North American performance, including leadership in full-size pickup sales. Other highlights included growing digital services, with OnStar and Super Cruise subscriber growth accelerating during the quarter.
This was despite Q1 sales of $43.62 billion slightly missing expectations of $43.93 billion and dipping from $44.02 billion a year ago. Still, GM reported that its adjusted EBIT increased 22% YoY to $4.25 billion, reflecting improved margins and operational discipline.
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As for Ford, Q1 EPS of $0.66 crushed expectations of $0.20 by 230% and climbed from $0.14 a share in the prior year quarter. This came as Q1 sales rose 6% to $39.81 billion and edged estimates of $39.34 billion. Most intriguing, Ford’s adjusted EBIT more than tripled to $3.5 billion.
Ford also highlighted a $1.3 billion tariff refund. While the refund has not yet been received, the company stated it will help offset rising commodity costs, especially for aluminum.
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GM & Ford’s Raised Guidance
GM raised its FY26 EPS guidance range to $11.50-$13.50 and increased its adjusted EBIT outlook to a range of $13.5-$15.5 billion. These figures were up from prior EPS and EBIT guidance of $11.00-$13.00 and $13-$15 billion.
Meanwhile, Ford raised its adjusted EBIT guidance to a range of $8.5-$10.5 billion from $8-$10 billion.
Bottom Line
A combination of earnings beats, higher guidance, tariff relief, and expanding margins may start to give analysts confidence that GM and Ford can outperform in an increasingly competitive auto market.
For now, GM and Ford stock both land a Zacks Rank #3 (Hold). That said, buy ratings could be on the way, given that EPS revisions are likely to trend higher and these auto giants remain attractively valued at less than 10X forward earnings, respectively.
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Ford Motor Company (F) : Free Stock Analysis Report
General Motors Company (GM) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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