General Motors GM delivered robust Q3 results this morning, showcasing remarkable growth and an uplift in its full-year profit outlook. Witnessing a swift post-earnings surge, GM shares skyrocketed by +9% in today’s trading session, overshadowing Tesla’s TSLA stock which dipped -0.3% ahead of its Q3 report post-market hours on Wednesday, October 23.
General Motors Shines in Q3
Powered by its North American operations, General Motors’ Q3 sales surged 10% year over year to $48.75 billion, surpassing the $43.98 billion sales estimate by a whopping 11%. Additionally, Q3 earnings soared 30% to $2.96 per share, exceeding the $2.49 per share estimate by an impressive 19%.
GM has consistently outperformed the Zacks EPS Consensus for nine consecutive quarters, boasting an average earnings surprise of 17.54% in its last four quarterly reports.
Tesla’s Q3 Outlook
Shifting focus to Tesla, Q3 sales are anticipated to rise by 9% to $25.57 billion. On the flip side, Tesla’s Q3 EPS is projected to decline by -12% to $0.58 compared to $0.66 per share in the previous year’s quarter.
Intensified EV competition from established players like General Motors and Ford F has led to price reduction strategies, impacting Tesla’s short-term earnings outlook. Tesla’s annual EPS is predicted to decrease to $2.25 from $3.12 per share in 2023. Nevertheless, the FY25 EPS is expected to stabilize and rebound to $3.02 per share.
Comparing Recent Performance & Valuation
In the year to date, GM shares have surged by nearly +50%, significantly outperforming both the broader indexes and Tesla’s -13% movement.
Despite the remarkable YTD rally, GM currently trades at just 4.9X forward earnings, while Tesla is higher at 97.3X. This notable premium for Tesla’s stock is, however, lower than its decade-long median of 119.2X forward earnings and far from its peak levels.
Tesla’s price-to-sales ratio of 7X aligns closely with its 10-year median of 5.2X and falls comfortably below the high of 23.8X during this timeframe. Conversely, General Motors’ P/S ratio of 0.3X sits well beneath the optimal threshold of below 2X.
Final Reflections
Given General Motors’ solid performance, the rally in GM shares post-earnings is poised to continue its momentum. Meanwhile, a stabilization in Tesla’s valuation could potentially restore investor confidence if the EV leader delivers robust Q3 results.
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