GM reported earnings that beat analysts’ estimates. But due to coronavirus production impacts, the company has suspended its dividend at this time.
General Motors Company (GM)
From Cabot Undervalued Stocks Advisor
General Motors (GM 22.60) reported solid first quarter results this morning. Adjusted diluted EPS of $0.62 beat the $0.33 consensus estimate. Revenue was $32.7 billion, exceeding the $31.1 billion estimate. The earnings press release details management’s actions toward responding to COVID-19 (both worker safety and manufacturing healthcare supplies), liquidity, reopening auto production and the company’s commitment to electric and autonomous vehicles. The company aims to restart U.S. and Canadian auto production on May 18.
I’m moving GM from Hold to a Strong Buy recommendation, based on the company’s financial strength as it successfully deals with the business lockdowns resulting from the virus pandemic, the favorable response from Wall Street, and the optimism reflected in the price chart. GM has traded consistently between 20-24 for five weeks. The stock is reacting well to the earnings report, up 6% this morning. I anticipate a near-term breakout past 24, at which time the stock could promptly rise to 27 or 30, depending on economic news and price action in the broader market. Strong Buy.
Crista Huff, Cabot Undervalued Stocks Advisor, www.cabotwealth.com, 978-745-5532, May 6, 2020