General Motors Co. is slated to report third-quarter earnings before the bell on Tuesday amid another escalation of the auto workers strike.
Workers at GM
GM,
Ford Motor Co.
F,
and Stellantis NV
STLA,
have been on strike since mid-September, in a break with the United Auto Workers tradition of striking at one carmaker at a time. On Monday, the union expanded the strike to a Stellantis factory making Ram pickup trucks.
While the strike’s impact on the third quarter is likely to be limited, as only the first two weeks of the labor action fell in the July-September period, all eyes will be on GM’s guidance and how it could be affected by the labor actions.
Here’s what to expect:
Earnings: Analysts polled by FactSet are calling for GM to report adjusted earnings of $1.87 a share in the quarter, which would compare with adjusted EPS of $2.25 in the third quarter of 2022.
Revenue: The analysts surveyed by FactSet expect revenue of $42.5 billion for GM in the quarter, compared with revenue of $41.9 billion in the year-ago period.
Stock movement: GM shares have underperformed the S&P 500
SPX
in recent months and have lost about 12% so far this year. That compares with an advance of around 10% for the index in the year to date.
What else to expect: GM earlier this month reported a 21% rise in vehicle sales in the quarter, showing some resilience against rising interest rates.
That is expected to translate into a “solid financial performance,” analysts at Fitch Ratings said in a note Monday.
GM executives are expected to shy away from extensive comments about the expected financial impact of any potential labor agreement, the Fitch analysts said.
BofA Securities’s John Murphy was less sanguine about GM’s prospects for the quarter, saying that his estimates for both GM and Ford are below consensus thanks to the strike and that he expects “a more sizable hit” in the fourth quarter.
Earlier in October, GM said that the first two weeks of the strike cost it about $200 million.
Analysts at Deutsche Bank, led by Emmanuel Rosner, calculated this week that the strike has cost GM some 61,722 vehicles that otherwise would have been produced.
Then there’s electric-vehicle production. GM surprised markets a week ago by saying it was delaying by one year the opening of an electric-vehicle plant in the Detroit area, citing uncertainty about demand.
The Orion plant, which is being retooled to make electric pickup trucks, will be open by late 2025 instead of next year, the carmaker said. Expect questions from analysts regarding that more cautious tone from GM about EVs. Just two years ago, GM unveiled ambitious EV plans, including the goal to invest $35 billion in its “all-electric future.”
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