GM shares rally 5% following earnings beat and strong guidance; Spotlights EV business for 2024

GM (General Motors) reported earnings of $1.24 per share, beating expectations by 8 cents. Revenues experienced a slight decline of 0.3 % year-over-year, totaling $42.98 billion compared to Street expectations of $38.81 billion. 

GM's EBIT-adjusted reached $1.76 billion, reflecting a solid performance, and the company's automotive operating cash flow amounted to $1.3 billion, down 70% from the prior year period.

Looking ahead, GM has provided optimistic guidance for the fiscal year 2024. The company anticipates earnings per share (EPS) in the range of $8.50 to $9.50, well above analysts" expectations of $7.75. Additionally, GM expects EBIT-adjusted to range between $12 billion and $14 billion, with adjusted automotive free cash flow estimated at $8 billion to $10 billion, both above Street expectations. These projections indicate GM's confidence in its future performance and its commitment to delivering value for shareholders. 

GM's 2024 financial guidance also includes projected capital expenditures of $10.5 billion to $11.5 billion, which considers investments in the company's battery cell manufacturing joint ventures. This investment reflects GM's commitment to expanding its electric vehicle (EV) capabilities and taking advantage of the growing market for EVs . 

Furthermore, GM plans to return a significant portion of its adjusted automotive free cash flow to shareholders, with nearly two-thirds of the $22 billion generated in 2022 and 2023 being allocated for this purpose. 

GM is optimistic about the future of the US economy, job market, and auto sales, expecting a resilient market. The company forecasts healthy industry sales of approximately 16 million units, with continued growth in the EV segment. GM believes that almost 10% of industry sales in the US will be EVs in 2024, based on third-party forecasts, indicating the potential for record EV sales in the coming year. 

The company's EV business also shows promising signs. GM expects its US EV portfolio to post a profit in the second half of the year, driven by factors such as strong demand for EVs, growth in production, lower commodity prices, and other favorable conditions. While there may be some uncertainty due to the slower pace of EV growth, GM is confident in the long-term potential of the EV market. 

The company's first US battery cell plant is already at full production, and the launch of a second plant is anticipated in Q1 2024. These investments highlight GM's dedication to positioning itself as a leader in the EV market and ensuring a reliable supply of battery cells for its electric vehicles.

In addition to the impressive financial performance, GM has announced shareholder-friendly initiatives. The company revealed a $10 billion accelerated share repurchase (ASR) program, reflecting their confidence in the business and its value. It will also increase its quarterly dividend by 33% starting in 2024. These actions emphasize the company's commitment to rewarding shareholders and enhancing shareholder value. 

In conclusion, GM's Q4 Earnings report showed a robust performance, surpassing earnings expectations and showcasing resilience in the face of a slight decline in revenues. The company's guidance demonstrates that for 2024 exhibits optimism, with projected increases in EPS, EBIT-adjusted, and automotive free cash flow. GM's focus on the EV market, promising prospects for the industry, and commitment to rewarding shareholders through buybacks and increased dividends further reinforce the company's position as a leading player in the automotive sector. With the EV market expected to continue growing, GM appears well-positioned to capitalize on this trend and deliver value to its stakeholders.