General Motors is the IBD Stock Of The Day after delivering its third earnings beat-and-raise report this year. GM stock broke out powerfully to its highest level since February 2022.
In Q3, GM earnings surged 30% vs. a year earlier and revenue grew 11%, led by pickup truck demand in North America. Earnings smashed Wall Street expectations and revenue also beat. On Tuesday, the automaker again hiked its 2024 outlook, while highlighting Q3 achievements amid industry challenges.
Auto Giant Grows Market Share But Issues Warning
"We grew U.S. retail market share with above-average pricing, well-managed inventories and below-average incentives," GM CEO Mary Barra said in a letter to shareholders. In other words, GM is growing share while spending less than other companies to incentivize car sales.
Industry conditions remain challenging. On Tuesday, Barra cautioned investors against "mistaking progress for winning."
"Competition is fierce, and the regulatory environment will keep getting tougher," she wrote in a letter to shareholders. "That's why we are focused on optimizing our ICE (internal combustion engine) margins and working to make our EVs (electric vehicles) profitable on an EBIT (earnings before interest and taxes) basis as quickly as possible."
The statement seemed to allude to both emissions regulations and the 2024 U.S. election, with presidential candidates Donald Trump and Kamala Harris jousting on key EV, tax and tariff policies.
GM Stock Gaps Up On Q3 Earnings Beat-And-Raise
Shares of General Motors soared 9.8% in huge volume on the stock market today after the Q3 report. GM stock rocketed out of a first-stage cup-with-handle base with a 49.86 buy point on Tuesday, according to MarketSurge pattern recognition, while hitting its best level since February 2022. GM stock is now extended from the buy zone.
The relative strength line hit a fresh 2024 high as the emerging EV stock broke out, a positive sign. That is marked by a blue dot at the end of the RS line on the weekly MarketSurge chart.
Earlier in October, GM stock bounced off support at the 50-day moving average. During an investor event on Oct. 8, General Motors said that its electric cars will soon cross over to profitability.
Growing EV Rival To Tesla And Ford
Few companies make money on electric vehicles right now besides Tesla and a few of its Chinese competitors. Unlike Ford, General Motors does not break down EV losses. On Tuesday, GM merely indicated that rising EV volumes hurt third-quarter results.
In Q3, GM became the No. 2 EV seller in the U.S. behind Tesla, knocking Ford off that perch.
Tesla reports Q3 earnings on Wednesday and Ford will follow on Oct. 28.
Strong Demand, Share Buybacks Fuel GM Earnings Outlook
This year, GM stock is far outpacing shares of Ford and Tesla on the back of a series of guidance hikes and billions of dollars in share buybacks.
That performance flies in the face of industry woes, including inflation, high interest rates and Chinese competition.
For 2024, GM is now guiding EPS of $10-$10.50, with the $10.25 midpoint above prior guidance of $9.50-$10.50. Going into the report, analysts expected 2024 EPS of $9.97, a 30% increase from 2023.
Year to date, GM stock has now soared more than 49% after Tuesday's earnings breakaway gap. Still, it remains not that much higher than where it was a decade ago.
