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General Motors Co GM

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GM Fights Through Semiconductor Shortage to Post Record First-Quarter Profit

Analyst Note

| David Whiston, CFA, CPA, CFE |

General Motors reported a strong start to 2021, with first-quarter adjusted diluted EPS of $2.25 far above the Refinitiv consensus of $1.04. We are raising our fair value estimate by $1, to $60, on expectation of slightly higher U.S. industry sales for 2022-24 than previously modeled because of continued robust demand that may need 2022 to be fulfilled because of the ongoing semiconductor shortage. We are glad to see management maintain 2021 guidance given in February both for full-year profits but also for the impact of the shortage being lost automotive free cash flow of $1.5 billion to $2.5 billion. Management said it is “highly confident” in its guidance, and total company adjusted EBIT is expected to come at the high end of the guidance range of $10 billion to $11 billion, all good news, given the huge but temporary problem of the shortage. With GM’s record first-quarter total EBIT of $4.4 billion and first-half 2021 EBIT guidance at about $5.5 billion, GM expects second-quarter profit but said the quarter will be the worse of the year, which we agree with.

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Company Profile

Business Description

General Motors Co. emerged from the bankruptcy of General Motors Corp. (old GM) in July 2009. GM has eight brands and operates under four segments: GM North America, GM International, Cruise, and GM Financial. The United States now has four brands instead of eight under old GM. The company remains the market leader in the U.S. with 17.3% share in 2020. GM Financial became the company's captive finance arm in October 2010 via the purchase of AmeriCredit.

300 Renaissance Center
Detroit, MI, 48265-3000
T +1 313 667-1500
Sector Consumer Cyclical
Industry Auto Manufacturers
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 155,000