How General Motors Plans to Drive Faster Growth
On Thursday, General Motors will release its latest quarterly results. The key to making smart investment decisions on stocks reporting earnings is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.
GM has come a long way from the financial defeat investors suffered when it filed for bankruptcy. Yet after enduring years of massive government intervention, GM has finally seen success, and its share price has responded by moving to new two-year highs recently. Let's take an early look at what's been happening with General Motors over the past quarter and what we're likely to see in its quarterly report.
Stats on General Motors
Analyst EPS Estimate
Change From Year-Ago EPS
Change From Year-Ago Revenue
Earnings Beats in Past 4 Quarters
Source: Yahoo! Finance.
Can General Motors shift into overdrive this quarter?
In recent months, analysts have hit the brakes on their assessments of GM's earnings prospects, substantially reducing estimates for both the first quarter and the full 2013 year. Yet even with declines of $0.14 per share for the just-ended quarter being just part of a nearly $0.40 per share downgrade for 2013's earnings estimates, the stock has managed to rise 7% since late January.
GM has taken considerable steps in its attempts to retake its status as the No. 1 automaker in the world. With its Chevrolet brand having boasted 10 straight quarters of record global sales, GM is trying to capitalize on its popularity, with a new Silverado pickup competing against rival Ford's mainstay F-150 line. Meanwhile, with the company finally getting around to redesigning or refreshing nearly all of its vehicle models in the next three years, GM is positioning its Cadillac luxury brand to become relevant again in the lucrative niche, which has become dominated by the Lexus brand of Toyota as well as European players BMW, Daimler, and Volkswagen's Audi.
Yet GM is facing vastly different conditions around the world. In China, GM has made huge inroads, selling more vehicles there than it does domestically. Yet because it has to share profits with its partners, the Chinese business is much less lucrative than its U.S. sales. By contrast, in Europe, GM hasn't been able to stem multibillion-dollar losses, and any turnaround there will be excruciatingly slow even if it's eventually successful.
The big question that many investors have of GM is whether the automaker will ever get rid of the U.S. Treasury's investment stake in the company. The current plan is for the Treasury to sell off its remaining stake between now and mid-2014, which would finally leave the company free of government intervention -- albeit without having paid back taxpayers in full.
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The article How General Motors Plans to Drive Faster Growth originally appeared on Fool.com.Motley Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Ford and General Motors. The Motley Fool owns shares of Ford. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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