General Motors Reports Strong 3Q 2022; Stock Continues to Look Inexpensive

General Motors Company (NYSE: GM) on Tuesday reported much better than expected 3Q 2022 results. Diluted 3Q 2022 EPS was US$2.25, beating analysts’ consensus projections of US$1.88. GM recorded US$1.52 of adjusted diluted EPS in the year-ago period.  

Remarkably, the company reported 3Q 2022 operating cash flow of US$5.3 billion versus approximately breakeven in 3Q 2021. In 3Q 2021, supply constraints from a global shortage of semiconductors had an enormous effect on its cash flows.

Somewhat surprisingly, GM did not boost its full-year 2022 EPS or adjusted EBIT guidance because of various “headwinds” the company faces. GM expects to hit the midpoints of its US$6.50-US$7.50 EPS and US$13.0 billion-US$15.0 billion adjusted EBIT ranges. GM’s adjusted EPS and adjusted EBIT are US$6.08 and US$13.5 billion, respectively, for the 12 months ended September 30, 2022.

GM delivered 556,000 vehicles in the U.S. in 3Q 2022, up from 447,000 a year ago. Its share of the U.S. car market reached 15.9% in 3Q 2022 compared with 12.8% a year ago. GM’s share of the U.S. electric vehicle market reached about 8% in the just-completed quarter due to strong sales of the Chevrolet Bolt EV. In comparison, Tesla, Inc. (NASDAQ: TSLA) accounts for about 60% of that market.

GM’s Automotive revenue rose about 65% in the third quarter, an unusually large increase for a company of its size. Similarly, its cash and marketable debt securities balance at September 30, 2022 — US$30.3 billion —  increased US$12.4 billion from June 30, 2022. The improved results trace partly to the company’s prioritizing the production of high-margin SUVs and pickup trucks given still-limited auto component supply, as well as less need to provide incentives to customers.

(in millions of US $, except for EPS and shares outstanding)3Q 20222Q 20221Q 20224Q 20213Q 2021
Automotive Revenue$38,703$32,814$32,823$30,349$23,424
Operating Income$3,392 $1,689 $2,196 ($1,898)$1,645 
Diluted Adjusted EPS$2.25 $1.14 $1.35$1.35$1.52 
Operating Cash Flow$5,315 $3,000 $2,104$6,809($49)
Cash – Period End$30,311 $17,908 $26,256$28,676$23,940 
Automotive Debt – Period End$18,783 $16,909 $16,892$16,818$17,022 
Shares Outstanding (billions)1.51.51.51.51.5

Of course, if a marked economic downturn were to occur, GM’s sales will likely be affected. Presumably, one of the first casualties of a recession will be big-tickets items. GM’s CFO, Paul Jacobson, says the company has not yet experienced any “direct impact” on its vehicle sales.

Nevertheless, General Motors shares, which trade at a P/E ratio of only 5.4x (based on the midpoint of company guidance), look inexpensive. The stock has rallied off a US$31 low in July, but is still down 45% since early January. On the other hand, GM’s low valuation may not fully shield the stock if investor concerns reignite that the likely magnitude of Fed tightening has not been fully discounted in the stock market.

General Motors Company last traded at US$38.14 on the NYSE.


Information for this briefing was found via Edgar and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Leave a Reply

Video Articles

Endeavour Mining Q1 Earnings: Cash Flow Is King

G Mining Oko West Feasibility: Move Fast, Break.. Nothing?

New Gold Q1 Earnings: What’s Behind The Market’s Surprising Reaction?

Recommended

First Majestic Posts Record Cash Flows In Q1 As Production Costs Fall

Brazil Potash Secures Funding In Support Of US$2.5 Billion Autozales Project

Related News

General Motors To Build Fourth Battery Plant, Scraps Chevy Bolt EV

General Motors (NYSE: GM) is rather committed to the oncoming demand for electric vehicles, announcing...

Tuesday, April 25, 2023, 11:15:35 AM

General Motors Announces Production Halt, Likely An Indication That Russia-Ukraine War Is Impacting Semiconductor Supply

On March 25, General Motors Company (NYSE: GM) announced one of the first tangible signs...

Sunday, March 27, 2022, 05:20:00 PM

GM’s Electric Hummer Poised to Compete with Tesla in the EV Market

It appears that Tesla is about to meet its match in the off-road segment of...

Tuesday, October 20, 2020, 02:03:00 PM

Domino’s Pizza Signs Deal With GM For EV Delivery Fleet

Domino’s Pizza (NYSE: DPZ) is the latest American company to begin its push towards using...

Tuesday, November 22, 2022, 11:37:00 AM

Odds Of United Auto Workers Strike Grows As Deadline Nears

The odds of strikes beginning September 14th by the U.S. United Auto Workers (UAW) union against...

Sunday, September 10, 2023, 09:07:00 AM