While the financial world had their eyes on the flashy performance of Tesla (TSLA) after hours on Tuesday, they might have missed the sleeper hit by General Motors (GM) who delivered outstanding Q1 results this morning, causing the stock to surge over 4% in a single day. This leap adds up to an impressive 25% increase year-to-date, outshining its competitor, Ford Motor (F), by a solid 6%, as Tesla stumbles -41% due to slower sales growth and a hiccup with its cyber truck.
GM’s stellar performance in the first quarter was highlighted by CEO Mary Barra, who credited the company’s 10.6% EBIT margin to operational efficiency and a top-notch full-size pickup fleet. The company’s midsize pickups, SUVs, and profit enhancement in the EV portfolio led to a net income of $3 billion or $2.62 per share, crushing the Zacks Consensus of $2.08 per share by an impressive 26%.
In a year-over-year comparison, Q1 earnings saw an 18% increase from $2.21 per share in the same quarter previously. Additionally, Q1 sales reached $43 billion, outperforming expectations by 4% and rising 7% on a year-over-year basis. Moreover, General Motors has exceeded both its top and bottom line projections for seven consecutive quarters.
General Motors’ Growth Trajectory
General Motors raised its fiscal 2024 EPS forecast to $9.00-$10.00 per share from $8.50-$9.50 per share, much to the delight of investors and Wall Street analysts. The current Zacks Consensus projects GM’s FY24 EPS at $9.12, reflecting a 19% increase from the $7.68 reported in 2023. The company also revised its guidance for adjusted EBIT, automotive operating cash flow, and adjusted automotive free cash flow upwards.
Despite the remarkable year-to-date surge in General Motors stock, trading at just 4.7X forward earnings, it sits at a significant discount compared to the Zacks Automotive-Domestic Industry average of 13.7X and even under Ford’s 6.8X. Over the past 60 days, EPS estimates for GM’s FY24 and FY25 have been on the rise, underlining the attractiveness of GM’s valuation.
The Road Ahead for GM
GM embodies the characteristics of a value stock, yet the iconic automaker is signaling a promising return to growth that investors have been eagerly anticipating. The current Zacks Rank #2 (Buy) for General Motors stock and an average Zacks Price Target of $50.54 per share indicate a potential 17% upside from the current levels, making it a compelling investment option.
Zacks showcases five well-established companies with strong fundamentals and a track record of dividend raises in its top dividend stocks for your retirement portfolio. These companies are poised to continue their dividend payouts into the future. Grab a free Special Report to gain unconventional insights and wisdom.
In Conclusion
General Motors has shifted gears from a subdued value play to a growth stock, and investors should seize the opportunity. The company’s recent performance and future outlook position it as a lucrative investment prospect. With the stock’s Zacks Rank of #2 (Buy) and the average Zacks Price Target projecting a 17% increase, GM is set to drive returns for investors.
