Automotive manufacturer General Motors (NYSE:GM) reported Q4 CY2024 results beating Wall Street’s revenue expectations , with sales up 11% year on year to $47.7 billion. Its non-GAAP profit of $1.92 per share was 4.3% above analysts’ consensus estimates.
Revenue: $47.7 billion vs analyst estimates of $43.57 billion (11% year-on-year growth, 9.5% beat)
Adjusted EPS: $1.92 vs analyst estimates of $1.84 (4.3% beat)
Adjusted EBITDA: $4.43 billion vs analyst estimates of $5.43 billion (9.3% margin, 18.4% miss)
Adjusted EPS guidance for the upcoming financial year 2025 is $11.50 at the midpoint, beating analyst estimates by 6.8%
Operating Margin: 3.2%, up from 2.1% in the same quarter last year
Free Cash Flow was -$19.02 billion compared to -$49 million in the same quarter last year
Market Capitalization: $60.39 billion
Company Overview
Founded in 1908 by William C. Durant, General Motors (NYSE:GM) offers a range of vehicles and automobiles through brands such as Chevrolet, Buick, GMC, and Cadillac.
Automobile Manufacturing
Much capital investment and technical know-how are needed to manufacture functional, safe, and aesthetically pleasing automobiles for the mass market. Barriers to entry are therefore high, and auto manufacturers with economies of scale can boast strong economic moats. However, this doesn’t insulate them from new entrants, as electric vehicles (EVs) have entered the market and are upending it. This has forced established manufacturers to not only contend with emerging EV-first competitors but also decide how much they want to invest in these disruptive technologies, which will likely cannibalize their legacy offerings.
Sales Growth
A company’s long-term performance is an indicator of its overall quality. While any business can experience short-term success, top-performing ones enjoy sustained growth for years. Regrettably, General Motors’s sales grew at a mediocre 6.4% compounded annual growth rate over the last five years. This fell short of our benchmark for the industrials sector and is a rough starting point for our analysis.
General Motors Quarterly Revenue
Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. General Motors’s annualized revenue growth of 9.4% over the last two years is above its five-year trend, suggesting its demand recently accelerated. General Motors recent history stands out, especially when considering many similar Automobile Manufacturing businesses faced declining sales because of cyclical headwinds.
General Motors Year-On-Year Revenue Growth
This quarter, General Motors reported year-on-year revenue growth of 11%, and its $47.7 billion of revenue exceeded Wall Street’s estimates by 9.5%.
Looking ahead, sell-side analysts expect revenue to decline by 4.7% over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and implies its products and services will face some demand challenges.
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Operating Margin
General Motors was profitable over the last five years but held back by its large cost base. Its average operating margin of 6.3% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.
On the plus side, General Motors’s operating margin rose by 1.4 percentage points over the last five years.
General Motors Trailing 12-Month Operating Margin (GAAP)
In Q4, General Motors generated an operating profit margin of 3.2%, up 1.1 percentage points year on year. The increase was a welcome development and shows its expenses recently grew slower than its revenue, leading to higher efficiency.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
General Motors’s EPS grew at a spectacular 17.4% compounded annual growth rate over the last five years, higher than its 6.4% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
General Motors Trailing 12-Month EPS (Non-GAAP)
We can take a deeper look into General Motors’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, General Motors’s operating margin expanded by 1.4 percentage points over the last five years. On top of that, its share count shrank by 26.2%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.
General Motors Diluted Shares Outstanding
Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.
For General Motors, its two-year annual EPS growth of 23.3% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.
In Q4, General Motors reported EPS at $1.92, up from $1.22 in the same quarter last year. This print beat analysts’ estimates by 4.3%. Over the next 12 months, Wall Street expects General Motors’s full-year EPS of $10.52 to grow 2.9%.
Key Takeaways from General Motors’s Q4 Results
We liked that General Motors beat analysts’ revenue expectations this quarter. We were also glad its full-year EPS guidance came in higher than Wall Street’s estimates. Overall, this quarter had some key positives. The stock remained flat at $55.56 immediately following the results.
