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GM Earnings: Good 2024 Guidance Boosts Stock by Nearly 10%

We believe General Motors stock remains undervalued.

In this photo illustration a General Motors Company logo seen displayed on a smartphone with a General Motors Company logo in the background.

Key Morningstar Metrics for General Motors

What We Thought of General Motors’ Earnings

General Motors GM finished 2023 with a good fourth quarter—hindered by nearly $1 billion in UAW strike costs—and introduced 2024 guidance that suggests a good year ahead. We are not changing our fair value estimate, but we will reassess all modeling inputs while rolling our model for the 10-K.

Fourth-quarter adjusted diluted earnings per share of $1.24 fell 41.5% year over year but beat the $1.16 Refinitiv consensus. Adjusted EBIT of $1.8 billion fell by 53.8%, and EBIT margin declined by 470 basis points to 4.1%. Adjusted auto free cash flow of $1.3 billion fell by 70% but left GM with automotive cash and securities of $19.8 billion.

We think the market was primarily concerned with GM’s 2024 outlook going into the earnings release, so adjusted diluted EPS guidance of $8.50-$9.50 was good news relative to the $7.87 consensus and our projection of $8.39. Total company adjusted EBIT guidance of $12 billion-$14 billion suggests some upside potential from 2023′s $12.4 billion (down 14.6% from 2022), with profit cadence likely to follow GM’s typical seasonal pattern of seeing its strongest results in the second and third quarters. Adjusted automotive free cash flow is guided down from 2023′s $11.7 billion, to $8 billion-$10 billion, on possibly higher capital expenditure and working capital.

Guidance assumes an average share count of just below 1.15 billion and U.S. industry sales of about 16 million, including heavy trucks. It also assumes a pricing decline of 2.0%-2.5%, which we think is reasonable but could prove too conservative if pricing does not decline as fast as planned, which occurred in 2023. Mix is also a headwind due to more crossover volume (versus trucks and SUVs) and electric vehicle sales growth, as battery production on existing models like the Cadillac Lyriq improves this year. New EVs this year include the Escalade IQ SUV, the Equinox crossover, and the Sierra and Silverado RST pickups. China will struggle this year and have a first-quarter loss.

General Motors Stock Price

Data as of Source: Morningstar Direct.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

David Whiston

Strategist
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David Whiston, CFA, CPA, CFE, is a strategist for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He covers the automotive industry, including dealerships, parts manufacturers, and automakers. He has covered the automotive industry since joining Morningstar in 2007.

Before Morningstar, Whiston spent four years in PricewaterhouseCoopers’ New York real estate audit practice and one year in its Chicago office working on real estate acquisition due diligence.

Whiston holds a bachelor’s degree in business administration with a concentration in accounting from the University of Richmond. He also holds a master’s degree in business administration with concentrations in finance, economics, and organizational behavior from the University of Chicago Booth School of Business. He holds the Chartered Financial Analyst® designation, and he is a Certified Public Accountant and a Certified Fraud Examiner. In 2012, he ranked first in the specialty retailers and services industry in The Wall Street Journal’s annual “Best on the Street” analysts survey. He ranked first in the same industry in 2011.

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