Should General Motors Worry More About Ford or Tesla?
General Motors will release its quarterly report on Wednesday, and the automaker has done an excellent job of bouncing back over the past several years after emerging from its bankruptcy filing. Yet in plotting its long-term strategy, General Motors has to consider not only its archrival, Ford Motor , but also the next generation of car companies looking for innovative niches in which to prosper. In particular, Tesla Motors has become a credible long-term threat to GM's business, and General Motors isn't assuming that Tesla is just a fad that will die out in short order.
General Motors still has a loyal following of customers who stick with its popular brands. In trucks, the Chevy Silverado is aimed at competing against Ford's hugely successful F-Series, while relaunches of the Impala and efforts to make the Cadillac a bigger player in the luxury space show GM's continued commitment to the car segment as well. Yet Ford has remained stubbornly competitive, and the Tesla Model S has launched to rave reviews. 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 report.
Stats on General Motors
Analyst EPS Estimate
Change From Year-Ago EPS
Change From Year-Ago Revenue
Earnings Beats in Past Four Quarters
Source: Yahoo! Finance.
Can General Motors earnings race higher?
Analysts have had decidedly mixed views of General Motors earnings in recent months, cutting their third-quarter estimates by $0.03 per share but boosting their full-year projections by triple that amount. The stock's long-term gains have stalled out recently, with shares falling 4% since late July.
We've already gotten a sense of what GM's results might look like from monthly sales figures. Total sales were up 16% in July and 15% in August, with falling fleet sales volume actually holding back stronger growth in retail activity. September saw an 11% decline, but when adjusting for differing numbers of selling days compared to the prior year, General Motors posted 2% gains in adjusted retail sales. Projections for overall sales in October look favorable as well, with Edmunds.com projecting 10% gains for GM.
Positive signs from Ford's earnings release last week could also bode well for General Motors. Ford saw overall sales rise 12%, leading to record pre-tax profits and prompting Ford to raise its guidance for the full year. In particular, improvement in Europe was encouraging, as losses have finally started to narrow after persisting for years. If General Motors can see some of the same positive results in Europe, it could be exactly the good news investors need to send shares soaring.
But General Motors is also looking at Tesla Motors as a serious threat. The company will launch its 2015 Cadillac ELR coupe in early 2014, but analysts are looking most closely at the car's price tag, which at almost $76,000 is actually above the base price for Tesla's Model S. With the same drivetrain as the much less expensive Chevy Volt, the Cadillac ELR doesn't have anywhere near the electric-only range that the Model S offers, instead being a plug-in hybrid that relies on its gasoline engine for driving longer distances. New GM initiatives to produce natural-gas-powered cars like the 2015 Chevy Impala show the company's commitment to greener cars, again following Tesla's lead.
In the General Motors earnings report, look to see whether the company keeps up with Ford's pace of growth. As the auto industry gets more competitive, GM will have to up its game another level to make sure it keeps up with Ford, Tesla, and other rivals as they fight for market share in the growing global vehicle market.
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The article Should General Motors Worry More About Ford or Tesla? originally appeared on Fool.com.Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Ford, General Motors, and Tesla Motors. The Motley Fool owns shares of Ford and Tesla Motors. 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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