General Motors
third-quarter results are coming Tuesday morning. What management says about labor, costs, and interest rates matters more for the stock.
Wall Street is looking for an operating profit of $3.3. billion and earnings per share of $1.87 from sales of $42.5 billion. In the third quarter of 2022,
GM
(ticker: GM) reported an operating profit of $4.3 billion and earnings per share of $2.25 from sales of $41.9 billion.
Coming into the report, full-year EPS guidance was $8.60 to $9.10 a share from sales of about $32.5 billion to $33.9 billion.
An earnings beat and guidance range would be great but investors have other things on their mind.
Top of mind is the United Auto Workers strike which began on Sept 15. Some 9,300 GM workers are on strike, about 20% of GM’s UAW-represented workers.
GM, on Friday, published details of an offer made to UAW leadership. It includes wage increases in the range of 25% cumulatively over four years. Wage increases have inflation protection included as well. There are also improvements to retirement benefits, workers’ progression to higher pay grades, profit-sharing, and time off.
UAW President Shawn Fain responded by indicating the union would ask for more. Tuesday will be a chance for investors to hear more from CEO Mary Barra about how the strike could end, and how far GM is willing to go on wage and other concessions.
GM management hosts a conference call at 8:30 a.m. Eastern time.
The strike has weighed on GM stock for months. Through Monday trading, GM stock is down about 24% since the start of July. The
S&P 500
is off about 5% over the same span.
The strike can’t be blamed for all the losses though. The economy still matters. Higher interest rates are making purchasing cars more expensive. Many new cars are bought with some form of financing.
Tesla
(TSLA) CEO Elon Musk lamented the impact higher interest rates were having on EV pricing and demand on his company’s second-quarter conference call.
Tesla
has been cutting prices to help offset the impact of rates. It has hurt profitability. Tesla reported second-quarter operating profit margins of less than 8%, down almost 10 percentage points year over year.
Tesla stock fell more than 9% after its earnings report, putting the issue of rates in focus for all auto investors. GM’s outlook on rates, and how it plans to compete with now-lower-priced Tesla EVs with be among other things investors are focused on.
Write to Al Root at [email protected]
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