Read The Full Article On: Marketwatch
General Motors Co. stock rose more than 2% on Thursday after the car maker reported quarterly profits that were double what Wall Street expected thanks to better pricing for its SUVs amid lean inventory.
GM GM, +5.39% earlier Thursday reported adjusted third-quarter earnings of $2.83 a share on sales of $35.5 billion. Analysts polled by FactSet expected adjusted earnings of $1.38 a share on sales of $35.4 billion.
“GM makes cars, but they should seriously think about representing the U.S. in the next summer Olympics because Q3 was a POLE VAULT above recently heightened expectations,” Chris McNally at Evercore ISI said in a note after the earnings.
Auto makers earlier this year applied the brakes on production out of a mix of pandemic-related demand fears and the lingering effects of factory shutdowns.
But sales in the U.S. and China “are recovering faster than many people expected, and GM is benefiting from robust customer demand for our new vehicles and services, especially for our full-size pickups and SUVs,” said John Stapleton, GM’s interim chief financial officer.
In a call with analysts following the results, GM executives said they expected to restore the company’s dividend by mid-2021 and vowed to continue to invest in the company’s U.S. factories regardless of the outcome of the presidential election.
GM benefitted from better pricing on newly launched full-size SUVs and “disciplined incentives across the industry due to lean inventory,” Mark Delaney at Goldman Sachs said in a note.
What the News Means for You and Your Money
Get the tools you need to succeed in the market, with real-time market data, news, and analysis from MarketWatch — one of the most reputable brands for personal finance, business, and market news. Become a MarketWatch subscriber today.
GM’s ability to rebound quickly after a few weeks of shutdown factories in the spring reflected internal cost and profit discipline as well as “a healthy return” of demand for its pickup trucks and SUVs, the company’s most profitable vehicles, said Karl Brauer, an analyst for iSeeCars.com.
Moreover, growing sales in China and an increasing focus on electric vehicles and technology suggest “healthy long-term planning and positioning to keep pace with a rapidly evolving industry,” Brauer said.