Key Takeaways:
- General Motors reported positive Q3 earnings, beating estimates by 19.63%.
- GM CEO Mary Barra is pleased with earnings and stated the company is actively managing the headwinds.
- Dealer inventories and computer chip supplies are up, bolstering profits.
WISCONSIN (CoinChapter.com) — When General Motors (NYSE: GM) reported a big beat with third-quarter earnings, it was a welcome upside surprise for the automaker.
That is mainly because of the automotive industry’s vulnerability to “global headwinds in 2023, including the energy crisis, slower global demand, and continued supply-chain disruptions,” as reported by Economist Intelligence.”
General Motors Beats Expectations
Wall Street was looking for earnings of $1.88 per share and $42.05 billion in revenue. The EPS was 19.63% over expectations, while revenue came in just a touch lower at $41.89 billion, or -0.39% below the estimate.
General Motors CEO Mary Barra is pleased with earnings but will not go so far as to say the company is doing great and out of the woods financially. Barra said after the release that GM is “actively managing the headwinds we face.”
During the coronavirus pandemic, the Detroit automaker has worked between a delicate balance of tight supplies and high demand. Sales increased 24% for Q3 with 555,580 vehicles. GM Authority reported, “Sales increased at the Chevrolet, Cadillac, and GMC brands while decreasing at Buick.”
Although GM had a respectable earnings beat, CFO Paul Jacobson said the company believes their earnings expectations are at a “midpoint” for the year.
The automaker is aware of the economic concerns but has not been adversely affected as of yet. Jacobson said during a media call, “We’re going to continue to be agile. We continue to see that strong demand.”
Inventory and Computer Chip Supplies Are Up
During the second quarter, GM struggled to build vehicles with enough parts.
About 75% of the 90,000 the company built were short at least one part, and sometimes more. This quarter, dealer inventory rose to 359 million, up from 248 million. The company does not see any signs of a recession and has no plans for employee layoffs.
The auto industry has been suffering shortages of computer chips since the pandemic began. Helping to cover shortfalls at home in the United States, GM has a joint venture with China which brought in $1.1 billion in 2021, up $586 million from 2020.
GM analyst Daniel Ives holds an Outperform rating for 2023, estimated at $42 per share. Electric vehicles are a primary reason for the optimistic outlook.
