General Motors (GM) swung to a second-quarter profit and lifted its outlook, a week after rival Ford (F) raised guidance and noted improvement in the supply of chips. GM stock fell.
GM Earnings
Estimates: Wall Street expects EPS of $1.82 vs. a loss of 50 cents per share a year ago, according to FactSet. Other estimates put it at $2.23. Revenue is seen growing 78% to $29.92 billion.
Analysts expect a Q2 cash burn of $184 million. General Motors bled $9.042 billion in cash in the year-ago quarter, amid widespread factory closures.
Results: EPS of $1.97 on revenue of $34.17 billion. Cash flow turned positive at $2.48 billion, and adjusted EBIT came in at $4.1 billion.
GM Financial recently extended Cruise a $5-billion line of credit to advance its commercial ramp of the Origin self-driving car.
Outlook: GM now sees full-year adjusted EBIT of $11.5 billion-$13.5 billion, compared with $10 billion-$11 billion previously.
The company also raised its 2021 EPS view to $5.40-$6.40 from a prior view of $4.50-$5.25. But that is still below Wall Street estimates of $7.07.
Last Wednesday, Ford reported a surprise profit and lifted its guidance for 2021 adjusted EBIT and cash flow. While the chip-supply crunch eased, management warned the situation "remains fluid."
That came after Tesla (TSLA) said it remains serious and is hard to predict, with chip giant Intel (INTC) warning shortage could stretch into 2023.
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GM Stock
Shares fell 4% to 55.59 in early Wednesday stock market trading. GM stock is working on a 64.40 cup-shaped buy point but is well below the entry for now, according to MarketSmith chart analysis. Ford stock fell 1.2%, Tesla stock rose 0.1% and Stellantis (STLA) added 2.3%, a day after the former Fiat Chrysler reported $7 billion in profits in the first half of 2021.
Toyota (TM) dipped 0.8% to 184.50, after reporting strong earnings but warning of an extended chip shortage. Toyota stock flirted with a 185.48 flat-base buy point Tuesday, a day ahead of earnings. Honda (HMC) rose 0.5% after beating Q2 views.
In July and August, General Motors and Ford idled factories again due to a lingering chip shortage. Some of those plants had resumed production after downtime in the spring.
Still, GM said it continues to prioritize its popular, profitable full-size trucks and SUVs during the crisis.
On Tuesday, Nikola (NKLA) warned that supply-chain woes "appears to be spreading a bit" rather than peaking, slashing targets for revenue and vehicle deliveries. The electric-truck startup and GM continue to partner on hydrogen fuel cells, after scaling back an earlier and broader EV partnership.
Meanwhile, General Motors and Ford continue to accelerate on EVs and AVs (electric vehicles and autonomous vehicles). In June, GM hiked its AV-EV investment to $35 billion, up from $27 billion. It plans to go all-electric by 2035 and has made key deals with battery and lithium suppliers in recent months.
Find Aparna Narayanan on Twitter at @IBD_Aparna.
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