Automakers report earnings this week. GM is set to be the standout

DETROIT — Wall Street expects General Motors to be the standout among the traditional Detroit automakers when they report second-quarter results this week, with sales and vehicle prices stable during the first half of the year for America’s largest carmaker.

GM is forecast to report a solid adjusted profit of $2.75 per share, up 44.2% from a year earlier, and $45.46 billion in revenue, up 1.6% over the prior-year period, according to average analyst estimates compiled by financial markets data and analytics company LSEG.

That compares to LSEG estimates for Ford Motor that call for adjusted earnings per share of 68 cents for the second quarter, down 5.2% from the second quarter of 2023. Ford’s automotive revenue is expected to increase 3.8% compared to a year earlier to $44.02 billion, according to LSEG.

GM reports earnings before markets open Tuesday. Ford is scheduled to report Wednesday afternoon after markets close, followed by Chrysler parent Stellantis, which reports earnings biannually, releasing its first-half results Thursday morning.

Several Wall Street analysts expect GM to guide toward the higher end of the automaker’s already raised guidance for 2024, if not raise it again as part of its second-quarter results. There’s less of a consensus regarding outlooks for Stellantis and Ford.

“We expect both Ford and GM to post solid 2Q beats, driven by favorable pricing; volume/mix will be a benefit for Ford, while GM should benefit from easy comps on cost,” Barclays analyst Dan Levy said in a July 15 investor note. “Both are expected to raise 2024 guidance.”

Evercore analyst Chris McNally remains “positive [on] GM (particularly over Ford),” citing the automaker’s lower pricing. Evercore still expects a “solid” second quarter for Ford, though, trending toward the upper half of its previously announced 2024 guidance.

Ford’s guidance for the year includes adjusted earnings before interest and taxes, or EBIT, of between $10 billion and $12 billion and free cash flow of $6.5 billion to $7.5 billion.

GM’s 2024 guidance comes in at adjusted earnings of $12.5 billion to $14.5 billion, or $9 to $10 a share, and adjusted automotive free cash flow in a range of $8.5 billion to $10.5 billion.

“Expect both companies to report solid quarters with either confident confirmations of prior guides (i.e. upper-end of ranges) or modest upward revisions,” Citi analyst Itay Michaeli said in a July 11 investor note.

Stellantis, with major operations in North America and Europe, is in a different position compared to its rivals.

The transatlantic automaker is expected to report an adjusted operating profit for the first half of the year, but investors are concerned about its North American operations.

The company is in the midst of correcting what CEO Carlos Tavares described as “arrogant” mistakes in the region that have led to sales declines, bloated inventories and investor concerns. Those comments came during an investor event last month.

Despite the problems, Stellantis finance chief Natalie Knight said during the June event that the company’s adjusted operating income margin would be between 10% and 11% for the first half of the year.

She also reconfirmed Stellantis’ 2024 guidance that included a double-digit adjusted operating income margin, positive industrial free cash flow and at least 7.7 billion euros ($8.4 billion) in capital return to investors in the forms of dividends and buybacks.

Shares of Stellantis are down by more than 12% in 2024 — in contrast to shares of GM, up 36%, and Ford, up about 18%.

Tavares noted the convergence of three issues at Stellantis: selling down vehicle inventory too slowly; manufacturing issues, specifically with two unnamed plants; and a lack of “sophistication in the way to go to market.”

Stellantis, which owns brands such as Jeep and Ram in the U.S., is expected to report an 11.3% year-over-year decline in revenue to 45.37 billion euros ($49.39 billion), according to LSEG.

Analysts still expect Stellantis to be profitable in 2024, with projected adjusted earnings per share of $4.82. However, that would be down 18.9% from last year.

For GM, Ford and Stellantis alike, investors will be watching for updates on their electric vehicle plans, capital spending and rising new vehicle inventory levels in the U.S.

“We believe the U.S. auto cycle dynamics can remain supportive of strong [automaker] earnings streams, with healthy pricing dynamics maintained even despite some normalization,” Barclays’ Levy said. “Yet inventory levels have risen. … We believe rising inventory levels require monitoring, as incrementally negative datapoints may pressure [automaker] stocks.”

— CNBC’s Michael Bloom contributed to this report.