GM Stocks Slide Further Than Broader Market: Key Insights for Investors

At the recent market closing, General Motors (GM) was valued at $48.13, showing a decline of -1.96% from the prior day. This drop did not keep pace with the S&P 500’s decrease of 0.56% for the same period. Meanwhile, the Dow experienced a downturn of 0.58%, and the technology-focused Nasdaq also slipped by 0.51%.

As of today, the stock price of this automobile company has increased by 4.58% over the last month. During the same period, the Auto-Tires-Trucks industry saw a rise of 16.76%, whereas the broader S&P 500 index advanced by 7.37%.

Investors will keep a close eye on General Motors' upcoming earnings release. It’s anticipated that their earnings per share (EPS) might come in at $2.54, marking a decline of approximately 16.99% compared to the previous year's corresponding period. Additionally, based on our latest consensus forecast, revenues are expected to drop slightly by about 5.41%, totaling around $45.37 billion from what was reported for this quarter last year.

For the entire year, the Zacks Consensus Estimates forecast earnings of $9.31 per share and revenues totaling $177.57 billion, indicating declines of 12.17% and 5.27%, respectively, compared to the previous year.

Investors should pay attention to any new modifications made by financial analysts regarding their forecasts for General Motors. These updates often mirror the most current short-term industry developments. As such, increases in estimated projections indicate that analysts have an optimistic view of the company’s operational performance and profitability potential.

Our findings indicate that these adjustments in forecasts directly correlate with future stock price movements. Investors may leverage this information through the use of the Zacks Rank. This framework takes into account such forecast revisions and offers a straightforward, practical scoring mechanism.

The Zacks ranking system, which spans from #1 (Strong Buy) to #5 (Strong Sell), boasts a notable track record of surpassing expectations, as confirmed by external audits. Stocks ranked #1 have yielded an impressive average yearly return of +25% since 1988. In the last thirty days, our aggregated earnings per share forecast has dropped by 13.58%. At present, General Motors holds a Zacks rank of #5 (Strong Sell).

Regarding valuation, General Motors is presently trading with a Forward P/E ratio of 5.27, indicating it is selling at a discount compared to the industry’s average Forward P/E which stands at 10.66.

We can further notice that GM presently has a PEG ratio of 1.32. This commonly used measure resembles the well-known P/E ratio but includes consideration for the anticipated growth rate in earnings. In comparison, automotive domestic stocks generally have a PEG ratio averaging at 1.11 according to yesterdays' closing values.

The domestic automotive industry falls under the Auto-Tires-Trucks sector. Positioned at the 218th rank according to the Zacks Industry Rank, this segment ranks within the lowest 12% among approximately 250-plus industries.

The Zacks Industry Rank evaluates the strength of our particular industry sectors by calculating the mean Zacks Rank of the component stocks within these groups. According to our findings, those sectors ranked in the top 50% tend to perform twice as well as those in the lower half.

Make certain to track all these share-movement indicators, along with numerous others, on JWTimurnews.

The article was initially published on Zacks Investment Research (JWTimurnews).