General Motors Co. (NYSE: GM) stock traded lower by less than 1 percent on Thursday morning, despite beating consensus forecasts for earnings and revenue in the first quarter.
After factoring in a $900 million charge as part of its South Korea business restructuring, GM reported adjusted, diluted first-quarter earnings per share of $1.43 and revenue of $36.1 billion. Wall Street had expected EPS of only $1.24 and revenue of $34.6 billion.
The market was unimpressed by the direction GM’s numbers are trending. Revenue was down 3.1 percent from a year ago. Net income was down 58.7 percent. Adjusted automotive free cash flow was negative $3.5 billion, down from negative $2.8 billion in the first quarter of 2017. GM says lower full-sized truck production and investment in the launches of the new Chevrolet Silverado, GMC Sierra and GEM models were to blame for the decline in free cash flow.
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GM reported 715,794 U.S. vehicle sales in the first quarter, up 4 percent from a year ago. Crossover sales were particularly strong, up 23 percent across all brands.
North American EBIT-adjusted margin was 8 percent for the quarter, and GM says it is on track to hit its full-year margin target of 10 percent.
“We were profitable in all operating segments, including record performance in China and for GM Financial,” CFO Chuck Stevens says in a statement. “Our Q1 results were on plan, and we remain confident in the full-year guidance we announced in January.”
GM previously said it expects to invest $8 billion in its business in 2018, $1 billion of which will go to its autonomous vehicle program. GE also guided for full-year EPS in the $6 to $6.50 range, slightly below its 2017 EPS of $6.62.
Bank of America analyst John Murphy says GM is well-positioned for the second half of 2018 and beyond.
“We continue to believe that GM is one of the best-positioned companies longer-term, as its autonomous EV ride-sharing fleet efforts, combined with the overlay of OnStar, puts GM in a unique and strong competitive position,” Murphy says.
[See: 10 Stocks Already in a Bear Market.]
Bank of America has a “buy” rating and $60 price target for GM stock.
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Market Shrugs Off General Motors Earnings Beat originally appeared on usnews.com
