General Motors Company (NYSE:GM) shares popped by more than 4% in Tuesday afternoon trading after the company provided 2017 earnings guidance that should clobber an already compelling 2016 performance. The move continues a brisk 15%-plus climb in GM stock over the past couple of months.
General Motors says it will earn $6 to $6.50 per share in 2017. That’s better than the $5.50-$6 range estimated for 2016, the top end of which GM says it’s pacing to hit. Moreover, GM says that revenues will head higher next year as well. Pretax adjusted margins are expected to at least stay level, if not improve.
While GM has made headlines of late for butting heads with President-elect Donald Trump over the company’s small-car production in Mexico, it appears Trump broadly has been the automaker’s friend. General Motors and other automakers have seen two robust months’ worth of auto sales following Trump’s presidential election victory.
Said GM President Dan Ammann to Financial Times:
“It’s too soon to draw any firm conclusions obviously but December was a strong month capping off a pretty strong year, and early data on consumer confidence is favorable, equity markets are favorable, in all it looks like a favorable backdrop.”
More good news came in the form of additional stock buybacks. The company said it would repurchase $5 billion more in GM stock, tacked on to its current $9 billion program.
Among other highlights:
- GM now is targeting $1 billion more in cost savings by 2018, for a total of $6.5 billion.
- GM expects various services — including GM Financial, OnStar and Maven (a car-sharing division) — to earn $2 billion pretax by 2019.
GM Stock Charts
Tuesday’s move in General Motors stock is a strong bounce off the 20-day moving average, which shares have now been battling for a little less than a month.
Otherwise, GM stock looks technically strong, with a high Relative Strength Index (RSI) that’s still well below overbought readings, and plenty of space between the price and its loner-term moving averages.
This is the second time over the past month’s worth of trading that GM has punched above its late 2013 highs around $37.
As of this writing, Robert Martin did not hold a position in any of the aforementioned securities.
