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General Motors’ Q4 Earnings Hit the Track Tuesday A.M.

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February 6, 2017
General Motors profitability and earnings call scheduled.

General Motors appears to be on track to deliver another robust quarter of vehicle-sales growth when it opens its Q4 books on Tuesday ahead of the market opening. After a Q3 earnings number that set new records, might GM’s sales do it again, at a time when the industry sales were setting their own fresh peaks?

GM said that its December sales grew more than 3% over last year’s results—its best U.S. December sales performance since 2007. At the same time, it said its U.S. retail market share had gained another 0.3 points to 17.6% for December. That gave it a 16.8% share for the year, making GM “the U.S. retail industry’s fastest-growing manufacturer,” the company said.

The gains were led by strong sales from its Chevrolet line, plus higher average transaction prices compared to the year-ago period. A number of its vehicles haveset “personal bests,” and Buick had its best year since 2005.

The company appears to have strong momentum in that, when Mary Barra took over as CEO in 2014 she laid out some targets that some analysts say are being met. As always, Asia is a big area of focus as GM China is just over 48% of the total revenue. Some analysts will be particularly interested in her comments on tariffs and trade.

Some analysts say they will be looking for some information on what’s ahead, given the glut of new vehicles at dealerships. U.S. auto sales were off 2% in January on a year-over-year basis, according to Autodata Corp. GM’s January retail sales fell 4.9%, but the company did set a new January record for average transaction price, according to a company statement last week.

Also in last week’s statement, GM said that it was “optimistic” about this year “because the economy is strong and the company’s four brands are dramatically expanding their product offerings in fast-growing crossover segments.” (And in case you missed it, GM ranked fourth in last night’s TD Ameritrade Ad Challenge with 5,449 positive tweets related to its big game advertisements.)

On Wall Street, consensus revenue estimates stand at $42.20 billion, up from $39.60 billion a year ago, according to the third-party consensus average on the Earnings Analysis* tab on the thinkorswim® platform from TD Ameritrade. GM has outpaced Wall Street’s revenue expectations for the last four quarters. Per-share earnings projections are at $1.14, down from $1.39 a year ago. On the earnings side, GM has managed to beat Wall Street’s forecasts by double digits in seven of the last eight quarters.

The options market has priced in an expected share price move of just under 3% in either direction around the earnings release, according to the Market Maker Move™ indicator on the thinkorswim® platform.

Call buying activity has been seen at the 37 and 38 strikes, while puts have been active at the 36 strike. Implied volatility sits at the 28th percentile. (Please remember past performance is no guarantee of future results.)

Note: Call options represent the right, but not the obligation, to buy the underlying security at a predetermined price over a set period of time. Put options represent the right, but not the obligation, to sell the underlying security at a predetermined price over a set period of time.

GM, 12m

FIGURE 1: DRIVING HIGHER.

GM shares are up nearly 27% on a year-over-year basis and are just off a 52-week high. Shares are trading just above their 50-day moving average. Chart source: thinkorswim® by TD Ameritrade.  Data source: Standard & Poor’s. Not a recommendation. For illustrative purposes only. Past performance does not guarantee future results.

What Might Be Driving Earnings?

The new Earnings Analysis tab on the thinkorswim® platform gives you earnings history, consensus estimates*, volatility and more in a single-snapshot view.