General Motors (GM) Doubles Profit on North American Earnings

Shares of The General Motors Company (GM) were trading up +1.00 or +3.11 percent to $33.19 per share in Thursday’s premarket after the company reported stellar first quarter earnings and revenue. General Motors stock closed at $32.19 per share, up +0.22 or +0.69 percent in Wednesday’s regular trading session.

Detroit, Michigan based General Motors Company is one of the largest car manufacturers in the world, producing and distributing vehicles in 30 countries.
The company markets vehicles under 10 major brands, including Baojun, Buick, Chevrolet, Cadillac, GMC, Holden, Jiefang, Opel (OPELF), Vauxhall and Wulingand. General Motors led global vehicle sales for 77 consecutive years from 1931 to 2007. General Motors filed for Chapter 11 bankruptcy in 2009 and was subsequently bailed out by the U.S. government, making an initial public offering in 2010. The IPO was one of the largest to date and returned the company to profitability.

Earlier this morning, the General Motors Co. reported record first quarter earnings and margin. Earnings before interest and taxes or EBIT came to $2.7 billion with adjusted EBIT adjusted margin of 7.1 percent, which compares to $2.1 billion and 5.8 percent in EBIT adjusted earnings and margin for last year’s first quarter.

On a diluted basis, net income to stockholders came to $2.0 billion or $1.24 per share versus $0.9 billion or $0.56 per diluted share in the same period one year ago. After adjusting for certain special items, first quarter earnings per share were a record $1.26, an increase of +47 percent from 2015’s first quarter. The analyst consensus was for the company to report earnings of $1.01.

Net revenue for the first quarter was $37.3 billion versus $35.7 billion in the first quarter of 2015. On a constant currency basis, net revenues were higher by $2.9 billion from 2015’s first quarter. Analysts expected the company to report revenue of $34.9 billion.

GM’s Chairman and Chief Executive Officer Mary Barra stated in the company’s press release that, “We're growing where it counts, gaining retail share in the U.S., outpacing the industry in Europe and capitalizing on robust growth in SUV and luxury segments in China. This strong quarter also reflects the excellent progress we're making to improve results in our more challenged global markets. Importantly, the continued success of our core business is enabling us to invest in advanced technology and innovations that will help shape the future of personal mobility.”

North American pretax profits were a record $2.3 billion for the first quarter, but broke even in Europe after reporting a $200 million loss in last year’s first quarter. Earnings included a half billion dollar cash investment in Lyft, a ride sharing company, with $300 million for union worker buyouts and $60 million for the settlement of litigation.

General Motors stock is up over +22 percent since trading below $28 per share in February. Shareholders and the market are indicating optimism with this morning’s premarket action and could test the stock’s 52 week high of $37.45 in the near term.

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Published on Apr 21, 2016
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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