General Motors (GM) Hits 52-Week High on a Few Business Updates

Zacks Equity Research
·4-min read

General Motors GM hit a 52-week high of $49.35 yesterday to close the session at $48.86. The upswing was driven by a series of business updates. It approved a new $6 billion stock repurchase authorization. This follows the accelerated $10 billion share repurchase program announced in November 2023, which is expected to be completed by the end of this month.

Per Paul Jacobson, CFO of GM, the company is focused on the profitability of the internal combustion engine business, growth and improvement of the EV business profitability, and efficient capital deployment, which allows continued returns of cash to shareholders.

The new authorization will enable GM to repurchase shares opportunistically after completing the current reauthorization, although no timeframe was announced.

The buyback plans are announced amid uncertainty about the adoption of all-electric vehicles and stalling customer demand for new vehicles.

Per Jacobson, GM's investments in its brands and product portfolio, along with operational discipline, are delivering consistently strong revenue growth, margins and free cash flow.

General Motors provided a few more updates at the recently held Deutsche Bank Global Auto Industry Conference.

GM Trims 2024 Sales and Production Guidance for All-Electric Vehicles

The legendary automaker is reducing its expected sales and production of all-electric vehicles for 2024 due to slower-than-anticipated U.S. adoption of EVs.

Per Jacobson, the company now anticipates producing 200,000 to 250,000 all-electric vehicles this year, down from the previous estimate of 200,000 to 300,000. This adjustment aligns production with the slower-growing demand. The lower end of the revised range reflects the company’s business momentum.

GM expects EVs to comprise 8% of U.S. sales industrywide this year, which is lower than many other auto analyst forecasts of around 10% for 2024.

The EVs will become profitable on a production basis once they reach 200,000 units, a milestone still expected in the fourth quarter. In May, the company sold more than 9,500 EVs in North America. In the first quarter, EV sales were 16,425 units, representing 2.8% of GM's overall sales.

GM Invests $850M in Cruise to Cover Operational Costs

General Motors is investing $850 million into Cruise to cover operational costs after shutting down its robotaxi service following a pedestrian accident.

Per Jacobson, the investment will support Cruise as it resumes autonomous vehicle testing in several U.S. cities. Cruise is also seeking new external investors.

Cruise had been a significant financial loss for GM even before the incident last year when a driverless vehicle dragged a pedestrian in San Francisco. Since 2017, GM has lost $8.2 billion on Cruise, including $3.48 billion in 2023. Cruise agreed to a settlement of at least $8 million with the injured woman.

In response to the incident, Cruise grounded its vehicles, conducted a safety review and hired law firms to examine its protocols. Last year, the company issued a recall of all 950 Cruise vehicles to update vehicle software. Several top executives resigned and a quarter of the staff was laid off. General Motors’ executives, including Craig Glidden and Mo Elshenawy, stepped in, with Jon McNeill named as vice chair of the Cruise board alongside GM CEO Mary Barra.

Despite previously reducing spending on Cruise, GM remains committed to the company, hoping for a future return on its investment. Cruise has slowly redeployed cars, starting with human-driven vehicles in Houston, and plans to transition to supervised autonomous driving. It also operates vehicles in Phoenix and Dallas.

Zacks Rank & Key Picks

GM currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the auto space are Blue Bird Corporation BLBD, Oshkosh Corporation OSK and American Axle & Manufacturing Holdings, Inc. AXL, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for BLBD’s 2024 sales and earnings suggests year-over-year growth of 17.29% and 155.14%, respectively. The EPS estimates for 2024 and 2025 have improved 63 cents and 69 cents, respectively, in the past 60 days.

The Zacks Consensus Estimate for OSK’s 2024 sales and earnings suggests year-over-year growth of 9.86% and 11.92%, respectively. The EPS estimates for 2024 and 2025 have improved 12 cents and 10 cents, respectively, in the past 30 days.

The Zacks Consensus Estimate for AXL’s 2024 sales and earnings suggests year-over-year growth of 3.05% and 544.44%, respectively. The EPS estimates for 2024 and 2025 have moved up 2 cents and 8 cents, respectively, in the past 30 days.

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