General Motors’ first-quarter earnings are coming Tuesday morning. Investors will want to see progress offsetting higher wages following the 2023 labor negotiations with the United Auto Workers Union.
For the first quarter, Wall Street is looking for earnings per share of $2.12 and an operating profit of $3.1 billion from sales of $42.1 billion. A year ago,
reported EPS of $2.21, operating profit of $3.6 billion, and sales of $40 billion.
GM is expected to produce lower earnings on higher sales partly because labor costs are rising. GM and the UAW agreed to a new labor deal in November. Wages are set to rise some 25% between November 2023 and April 2028. Wages went up about 11% when UAW membership ratified the new contract, helping offset some of the cost inflation workers felt in recent years.
Along with first-quarter numbers, GM management should update full-year guidance. In January, GM said 2024 operating profit should be between $12 billion and $14 billion. The midpoint at $13 billion is better than the $12.4 billion generated in 2023.
Deutsche Bank analyst Emmanuel Rosner believes guidance could go even higher “given stronger pricing for longer than assumed.” Vehicle prices are down a little to start 2024, but declines are less than he feared.
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Following results, options markets imply the stock will move about 5%, up or down. Shares have moved just under 5%, up or down, on average following the past four quarter reports. Shares have risen once and fallen three times over that span.
Coming into earnings, GM stock was up more than 20% year to date, beating the
by more than 15 percentage points.
GM shares were badly beaten up during the UAW negotiations and strike. The stock was below $27 in November. Shares opened 2024 under $36 apiece. The stock has rebounded, hitting a recent high north of $46 a share in early April.
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Management hosts a conference call at 8:30 a.m. Eastern time to discuss results.
Write to Al Root at allen.root@dowjones.com
