Wall Street's beating expectations with results from General Motors (GM.US) and UPS (UPS.US) complemented Coca Cola's successful quarterly report.
General Motors (GM.US)
Earnings per share came in higher than expected, but revenues posted a slight decline. The company, despite a massive increase in net income, chose not to update its year-end earnings forecast. Shares gained 4% before the market open:
Revenue: $41.89 billion vs. $42.22 billion (Refinitiv)
Earnings per share: $2.25 vs. $1.88 (Refinitiv)
Net income: $4.3 billion vs. $2.9 billion in Q3 2021
- The company reported earnings primarily due to higher SUV and pickup truck sales. Net profit margins narrowed y/y from 10.7% to 10.2%. The company expects 2022 net income to range from $9.6 to $11.2 billion with EPS of $6.5 to $7.5 per share. The main source of earnings continued to be the company's home market in the US ($3.9 billion in net income vs. $2.1 billion a year earlier). Consolidation of revenue from the US market means the company may be less vulnerable to a global recession because demand in the US economy remains strong and the risk of an energy crisis is lower.
- 75% of the 95,000 vehicles produced in inventory in H1 were completed. Eventually, all are expected to be completed and handed over to dealers by the end of the year. According to CFO, Paul Jacobson, the company will hit roughly the middle range of its profit forecast this year. Jacobson also reported that the company has registered no immediate impact on its products despite external concerns around the health of the economy. High demand supports the company's performance, with shares gaining 4% before the open. Wall Street is closely watching the auto sector looking for signs of consumer weakness amid rising interest rates and inflation.
- The financial division registered a drop in profit to $911 million. compared to $1.09 billion last year. The autonomous vehicle division has cost the company $1.4 billion in losses since the beginning of the year, including $500 million in Q3.
United Parcel Service (UPS.US)
The company reaffirmed forecasts for 2022 despite mixed quarterly results. The courier industry has seen recent declines amid comments from FedEX's CEO, who warned of a 'global recession' and falling holiday order volumes amid fading demand. UPS revenue fell below expectations, but earnings per share exceeded forecasts. Shares gained 4%:
Revenues: $24.16 billion vs. $24.3 billion forecast (Refinitiv)
Earnings per share (EPS): $2.99 vs. $2.84 forecast (Refinitiv)
- The company reported the resolution of a number of supply chain issues and improving shipping conditions. It reaffirmed full-year guidance of $102 billion in revenue and 13.7% operating margin. The company reduced capital expenditures by 10%, to $5 billion;
- U.S. domestic and international freight forwarding revenues increased year-on-year which looks optimistic looking at 'overheated' strong demand in the U.S. economy, in 2021. Revenues from supply chain solutions, however, declined 6.3% z through declines in airline and ocean freight revenues;
- The company attributed the decline in shipments in part to fewer deals with large e-commerce retailers like Amazon.
General Motors (GM.US) stock price, W1 interval. The chart provides mixed information on the company's stock. On the one hand, we see a double bottom formation, which may support the bulls. On the other hand, we see the SMA50 average approaching to cross the SMA200 from the top, which may herald a 'death cross' and a longer period of decline. The main support remains the $40 levels at which the SMA200 runs. Source: xStation5
