This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

GM's First Quarter Will Benefit From More Trucks: Analyst

DETROIT (TheStreet) -- Expectations for General Motors' (GM) first-quarter results aren't high, but analysts expect the automaker will benefit from increased truck production.

Analysts surveyed by Thomson Reuters expect earnings of 85 cents a share, down from 95 cents in the same quarter a year earlier. GM reports earnings on Thursday morning. The automaker reported Tuesday that April sales fell 8.2%, with calendar year-to-date sales down 0.4%. Last week, Ford (F) reported that its net income fell 45% for the first quarter, although it did beat estimates.

GM shares are up about 12% for the year, but have generally been in retreat since they reached $27.03, close to the year's high, on April 3. Shares closed Tuesday at $23.31. Meanwhile, Ford shares, which closed Tuesday at $11.23, are up about 2% for the year.

Dividend Growth Reveals the Path to Profits >>

"In Q1, GM is better positioned than Ford in North America," wrote UBS analyst Colin Langan, in a recent report. "GM's production is up 10% vs. only 3% at Ford. Moreover, profitable full-size pickup production is up 20% year over year. Consequently, we expect GM will report a Q1 beat." Langhan is estimating 87 cents a share, and has a buy rating on the shares.

Langan expects global pretax income of $1.7 billion, down from $2 billion in the same quarter a year ago, as a result of declines in Europe and South America. However, "we expect North American profits to be up about $760 million year over year due to higher volume and mix as well as improved year over year pricing," he wrote.

Credit Suisse analyst Chris Ceraso said that GM will benefit from increased production of its full-sized pickups in the quarter, with volume up about 20% from the same quarter a year earlier.

GM "has intentionally overstocked inventories of these units, with days' supply jumping to 130 days by March-end," above the normal inventory of about 80 days, in order to prepare for a changeover to the new T900 platform in the second and third quarters, Ceraso said in a recent report. He estimated first-quarter earnings of 84 cents a share.

"Just a strong GM truck production should be responsible for solid earnings across the (automotive supplier) group in Q1, deep cuts in the platform in Q2 are likely to result in earnings disappointments three months from now," Ceraso warned.

"Yes, we know that the market should be well aware of GM's truck cadence, but judging from Q2 consensus estimates, perhaps not everyone has been paying attention," he said.

6 Stocks to Benefit From Truckers' Switch to Natural Gas >>

Meanwhile, Standard & Poor's analyst Efraim Levy has a strong buy on GM and a price target of $34. This year, "global vehicle sales and production should rise, and GM's revenues should advance 8%," Levy wrote, in a recent report. "Profit margins should benefit from the improved volume, partially offset by a possibly weaker sales mix and higher raw material costs," as well as weaker European performance.

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here: Ted Reed

>To follow the writer on Twitter, go to http://twitter.com/tedreednc.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,987.51 -61.49 -0.36%
S&P 500 1,985.54 -11.91 -0.60%
NASDAQ 4,567.5980 -24.2080 -0.53%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs