General Motors (GM) delivered Q4 earnings this Tuesday morning. The beat sent shares 7% higher, adding to what has been a torrent pace over the past few months as GM has now gained 37% in that timeframe.
The US automaker is finally starting to find its footing after the UAW strike took its toll throughout 2023. Revenue of $42.98 billion was a slight step backward compared to the 2022 figure of $43.1 billion. Nevertheless, it still managed to beat the $39.53 billion consensus.
Profits soared for the quarter, too. Adjusted EPS of $1.24 outperformed the estimate of $1.16. Again, though – this was a bit of a disappointment compared to 2022, as the company saw a nearly 54% drop in adjusted EBIT.
The full-year adjusted EBIT of $12.4 billion aligned with the guidance of $11.7 billion to $12.7 billion. This was fueled by the company’s best year of sales since 2019, in which 2.6 million vehicles were delivered to market.
General Motors is optimistic about the current year, as it sees the US economy maintaining its resilience – and thus, the job market and auto sales will thrive. The forecast for 2024 calls for the same adjusted EBIT it aimed for last year – between $12 billion to $14 billion.
However, there is uncertainty surrounding the company’s EV division. Growth has slowed not just for General Motors but electric vehicles across the industry. This has prompted the company to budget $1.7 billion in reserve losses for its EV inventory. CFO Paul Jacobson still maintains his stance that 2025 will be the year the segment achieves profitability.
Investors can finally breathe a sigh of relief as it appears to be smooth sailing ahead, though. 2023 was riddled with issues from the UAW strike to a recent disaster in the company’s autonomous vehicle business unit, Cruise. A self-driving car recently ran a woman down and caused serious injuries.
Still, GM stock is an attractive opportunity right now. Beyond all this, we’ve taken a look through the VectorVest stocks software and found a few compelling reasons to buy GM today.
GM Has Fair Upside Potential and Excellent Timing Despite Poor Safety
VectorVest simplifies your strategy, empowering you to win more trades with less work and stress. The proprietary stock rating system tells you what to buy, when to buy it, and when to sell it.
It’s all based on 3 ratings: relative value (RV), relative safety (RS), and relative timing (RT). Each sits on its own scale of 0.00-2.00 with 1.00 being the average. Based on a stock’s overall VST rating, you’re even given a buy, sell, or hold recommendation. As for GM, here’s what you need to know:
- Fair Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (based on a 3-year price projection), AAA corporate bond rates, and risk. It offers a much better sense of a stock’s intrinsic value than a simple comparison of price to value alone. GM has a fair RV rating of 1.08 right now. It’s undervalued, with a current value of $43.82.
- Poor Safety: The RS rating is a risk indicator. It’s calculated through a detailed analysis of the company’s financial consistency & predictability, debt-to-equity ratio, business longevity, sales volume, price volatility, and other factors. GM has a poor RS rating of 0.79 right now.
- Excellent Timing: As you can see from the stock’s recent performance, GM has a strong, positive price trend - and the excellent RT rating of 1.41 reflects this. It’s based on the direction, dynamics, and magnitude of the stock’s price movement day over day, week over week, quarter over quarter, and year over year.
The overall VST rating of 1.14 is good, and it earns the stock a BUY recommendation in the VectorVest system. Learn more about this opportunity now through a free stock analysis!
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VectorVest advocates buying safe, undervalued stocks, rising in price. GM is up today after beating the top and bottom line in its Q4 earnings while issuing an optimistic outlook for the year ahead. The stock has gained more than 37% over the past few months. It has poor safety, but fair upside potential and excellent timing earn it a BUY recommendation.
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