Anticipation Builds for Q2 Earnings from Auto Giants
In the fast-paced world of trading, the upcoming release of second-quarter financial results from automotive behemoths such as Tesla, General Motors (GM), and Ford Motor (F) is the hot topic of conversation. Tesla and GM are gearing up to announce their earnings on Tuesday, July 23, followed by Ford on Wednesday. The big question on everyone’s mind is whether it’s a smart move to buy stocks in these industry giants as the earnings report looms near.
Analyzing Tesla’s Q2 Performance
Amidst a whirlwind month in the stock market, Tesla’s shares have been surging up by over 20%. This surge came on the heels of Tesla’s announcement that it delivered a remarkable 443,956 electric vehicles (EVs) during Q2, surpassing most analysts’ predictions. However, this figure marked a slight dip from the 466,140 deliveries in the same period last year. Tesla’s continued rally was fueled by stronger deliveries from Chinese EV producers like Nio and Li Auto, with Tesla’s Shanghai factory playing a critical role in its production output. Despite an anticipated increase in quarterly sales to $25.13 billion from $24.93 billion in Q2 2023, analysts expect Tesla’s Q2 earnings per share (EPS) to drop to $0.62 from $0.91.
Expectations for GM & Ford in Q2
Looking at the stock performance charts of Tesla provided a glimpse of the positive momentum General Motors and Ford have experienced ahead of their upcoming Q2 earnings. Both iconic automakers witnessed a substantial rise in the sales of electric vehicles, with GM reporting a 40% spike in EV deliveries to 21,930 and Ford boasting a 61% year-over-year increase to 23,957 EV deliveries during the same period. Projections show GM’s Q2 EPS expanding by 38% to $2.64, with sales expected to rise from $44.75 billion to $44.94 billion when compared to the previous year. In contrast, Ford’s Q2 EPS is anticipated to decline by 14% to $0.62, with a slight dip of 2% in sales forecasted to $41.65 billion.
Evaluating Valuation Metrics
When it comes to valuation, GM and Ford are shining stars, trading at enticingly low forward earnings multiples of 5.1X and 6.9X, respectively. Both GM and Ford have been awarded an “A” Zacks Style Scores grade for Value, highlighting their attractiveness to value investors. On the flip side, Tesla, the front-runner in the EV market, is trading at a notable premium with a forward earnings multiple of 96.4X, though reduced from its two-year high of 141.2X. Despite this decrease, it remains higher than the median of 76.3X during this period.
Final Thoughts
As the countdown to the Q2 earnings reports begins, General Motors and Ford’s stocks carry a Zacks Rank #2 (Buy) recommendation, indicating an opportune moment for investment considering their growth in the EV sector and attractive P/E valuations. Meanwhile, Tesla’s stock is currently rated a Zacks Rank #3 (Hold) following its extensive rally in recent months. Long-term investors in Tesla may still reap rewards; however, potential investors could be wise to await more favorable buying opportunities in the future.
