General Motors (GM) to Report Q3 Earnings: What's in Store?

General Motors CompanyGM is set to report third-quarter 2018 results on Oct 31, before the opening bell. In the last reported quarter, the company delivered a negative earnings surprise of 1.63%.

In fact, in three out of the trailing four quarters, the company delivered a positive earnings surprise while missed estimates once. The average earnings surprise in the trailing four quarters was 15.5%. Further, long-term expected earnings growth for the company (over three to five years) is currently pegged at 8.2%.

In the past year, shares of General Motors have underperformed the industry it belongs to. Over this time frame, shares of the company have plunged 28.3%, whereas the industry declined 23.5%.

Let's see how things are shaping up for this announcement.

General Motors Company Price and EPS Surprise

General Motors Company Price and EPS Surprise | General Motors Company Quote

Factors Influencing This Quarter

General Motors does not report monthly sales anymore. However, its third-quarter vehicle sales declined 11.1% from the prior-year quarter. Similar to most of the players in the industry, with increasing SUV demand, the company witnessed a sharp decline in passenger car sales. In fact, Chevrolet, Cadillac Buick and GMC brand witnessed sales declines.

However, this automaker constantly strives to excel in its products and technology offerings, grow its presence in China, and boost the results of the GM Financial segment. Further, General Motors is undertaking several initiatives to make its vehicles more advanced, safer and fuel efficient. It is presently focusing on the development of electric and autonomous vehicles.

For the soon-to-be-reported quarter, the Zacks Consensus Estimate for revenues from General Motors North America ("GMNA") segment is pegged at $25.6 billion. In second-quarter 2018, net sales and revenues of General Motors North America were $28.5 billion. Notably, in 2017, around 76.5% of the total revenues of the company were derived from the GMNA segment.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for General Motors this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below.

Earnings ESP : General Motors' Earnings ESP is -11.41% as the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.11 and $1.26, respectively.

You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank : General Motors presently carries a Zacks Rank #3.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks to Consider

Here are a few auto stocks worth considering, comprising the right combination of elements to deliver an earnings beat this time around:

Cummins Inc. CMI has an Earnings ESP of +0.83% and a Zacks Rank of 2. The company will report third-quarter 2018 financial figures on Oct 30.

You can see the complete list of today's Zacks #1 Rank stocks here .

Allison Transmission Holdings, Inc. ALSN has an Earnings ESP of +2.59% and a Zacks Rank #2. The company's third-quarter 2018 financial results are expected to be released on Oct 30.

Meritor, Inc. MTOR has an Earnings ESP of +13.30% and is a Zacks #3 Ranked player. The company's third-quarter 2018 financial numbers are expected to be announced on Nov 14.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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