General Motors CEO Mary Barra, center, at the New York Stock Exchange on Nov. 17, 2022.
Source: NYSE
DETROIT — Wall Street waits General Motors be the standout among Detroit's traditional automakers when it reports second-quarter results this week, with vehicle sales and pricing flat through the first half of the year for the largest U.S. automaker.
GM is forecast to report solid adjusted earnings of $2.75 per share, up 44.2% from a year earlier, and $45.46 billion in revenue, up 1.6% from the same period a year ago, according to the average analyst estimate compiled by financial markets data and analytics firm LSEG.
This compares with LSEG estimates for Ford Engine which forecast adjusted earnings per share of 68 cents for the second quarter, down 5.2% from the second quarter of 2023. Ford's automotive revenue is expected to rise 3.8% from a year ago to $44.02 billion, according to LSEG.
GM reports results before markets open on Tuesday. Ford is scheduled to report results Wednesday afternoon after markets close, followed by parent company Chrysler. Stellantiswhich reports its earnings half-yearly, and will publish its first-half results on Thursday morning.
Several Wall Street analysts expect GM to target the high end of the automaker’s already elevated 2024 guidance, or even raise it again as part of its second-quarter results. There is less consensus regarding the outlook for Stellantis and Ford.
GM, Ford and Stellantis stocks in 2024.
“We expect both Ford and GM to post strong second-quarter results, driven by favorable pricing; volume/mix will be a benefit for Ford, while GM should benefit from easy cost comparisons,” Barclays analyst Dan Levy said in a July 15 note to investors. “Both are expected to raise their 2024 guidance.”
Evercore analyst Chris McNally remains “positive” [on] GM (particularly over Ford),” citing the automaker’s lower prices. However, Evercore still expects a “solid” second quarter for Ford, trending toward the top half of its previously announced 2024 guidance.
Ford's outlook for the year includes adjusted earnings before interest and taxes, or EBIT, of $10 billion to $12 billion and free cash flow of $6.5 billion to $7.5 billion.
GM's 2024 guidance calls for adjusted earnings of $12.5 billion to $14.5 billion, or $9 to $10 per share, and adjusted automotive free cash flow of $8.5 billion to $10.5 billion.
“Both companies are expected to report strong quarters, either with confident confirmations of prior guidance (i.e., the high end of the ranges) or with modest upward revisions,” Citi analyst Itay Michaeli said in a July 11 note to investors.
Ford CEO Jim Farley at a battery lab for the automaker in suburban Detroit as he announces a new $3.5 billion electric vehicle battery plant in the state to produce lithium iron phosphate batteries, Feb. 13, 2023.
Michael Wayland/CNBC
Stellantis, with significant operations in North America and Europe, is in a different position compared to its rivals.
The transatlantic carmaker is expected to report an adjusted operating profit for the first half of the year, but investors are concerned about its North American operations.
The company is in the midst of correcting what Chief Executive Carlos Tavares described as “arrogant” mistakes in the region that have led to falling sales, bloated inventories and investor concerns. Those comments came during an investor event last month.
Despite the problems, Stellantis Chief Financial Officer Natalie Knight said during the June event that the company's adjusted operating profit margin would be between 10% and 11% for the first half of the year.
It also reconfirmed Stellantis' 2024 guidance, which included a double-digit adjusted operating profit margin, positive industrial free cash flow and at least €7.7 billion ($8.4 billion) in capital returns to investors in the form of dividends and buybacks.
Stellantis shares are down more than 12% in 2024, compared with GM shares, which are up 36%, and Ford, which are up about 18%.
Stellantis CEO Carlos Tavares speaks to the media on June 13, 2024 after the company's investor day at its North American headquarters in Auburn Hills, Michigan.
Michael Wayland / CNBC
Tavares highlighted the convergence of three problems at Stellantis: the slow pace of sales of vehicle inventory, manufacturing problems, specifically with two unidentified plants, and a lack of “sophistication in the way of going to market.”
Stellantis, which owns brands including Jeep and Ram in the United States, is expected to report an 11.3% year-over-year decline in revenue to 45.37 billion euros ($49.39 billion), according to LSEG.
Analysts still expect Stellantis to be profitable in 2024, with adjusted earnings per share forecast at $4.82. However, that would be a drop of 18.9% from last year.
For GM, Ford and Stellantis, investors will be watching for updates on their electric vehicle plans, capital spending and rising new vehicle inventory levels in the U.S.
“We believe that the dynamics of the US automotive cycle can continue to support strong growth [automaker] “Profit streams have remained with healthy price dynamics, even despite some normalization,” said Barclays' Levy. “However, inventory levels have increased… We believe rising inventory levels require monitoring as increasingly negative data points may put pressure on.” [automaker] stocks.”
— CNBC Michael Bloom contributed to this report.
