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GM Earnings: Strong Start to 2024 Is Good Sign for Rest of the Year

GM’s adjusted automotive free cash flow set a first-quarter record; its 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 started the year with good results and raised its 2024 guidance for earnings per share and adjusted EBIT, giving us no reason to change our fair value estimate of $84 per share. Adjusted diluted EPS of $2.62 rose 18.6% year over year (9.8% excluding buybacks) and beat the LSEG consensus of $2.15. EPS is now guided at $9.00-$10.00, up from $8.50-$9.50. Good demand expectations, cost-cutting efforts, and the fact that pricing didn’t fall as much as planned in the quarter led to a $500 million increase on both ends of adjusted EBIT guidance to $12.5 billion-$14.5 billion.

We’ve never believed the chip shortage inducing falling prices would mean poor 2024 results because we expected benefits from higher US volumes as the industry heals from the shortage. Total adjusted EBIT rose 1.8% year over year as a $200 million pricing headwind and $500 million mix headwind on fewer trucks and more electric vehicles were offset by a $700 million volume tailwind.

GM North America’s $900 million volume benefit offset $200 million in lower GM International volume. GM’s ongoing $2 billion cost reduction plan for 2024 contributed $200 million and helped offset higher labor costs in the new United Auto Workers union contract.

Despite modest EBIT growth, GM’s adjusted automotive free cash flow of $1.1 billion was a first-quarter record thanks to fewer working capital outflows. GM ended the quarter with $33.3 billion of automotive liquidity, including $13.5 billion in cash and bonds. Share repurchases beyond the accelerated share repurchase continued at $280 million and $800 million of authorization outside the ASR remains.

GM North America’s EBIT rose 7.4% to $3.8 billion, with the margin at a healthy 10.6% (down 30 basis points), but GMI lost $10 million and GM China had a negative equity income of $106 million. China and South America saw intentionally lower production to avoid excessive discounting to clear inventory, but China should be profitable in the second quarter.

General Motors Stock vs. Morningstar Fair Value Estimate

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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