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Ford, GM revenue review: Burning cash will be the main focus for the second quarter



General Motors Co. and Ford Motor Co. plan to report earnings for the second quarter of this week, which has led to an unprecedented decline in car production and increased concerns about demand for vehicles and other big tickets and the economic devastation caused by the coronavirus.

GM GM,
+ 2.45 percent
announces on Wednesday before the Ford F bell
+ 1

.15 percent
reports Thursday after the penis.

The carmakers’ results hit another quarterly blow from US rivals Tesla Inc. TSLA,
-4.09 percent.,
which posted unexpected BAP and adjusted earnings last week.

“Prior to the commissioning of the COVID-19 plants, the outlook for the automotive industry was staggering,” said David Kudla, CEO of Mainstay Capital Management.

Until 2019. End-of-life investors and many in the industry feared that by 2020. Sales will not be the same as in recent years, which were the times of automatic car sales.

“There is no doubt that the carmakers suffered significant losses in the second quarter, but the proactive balance sheet actions allowed these companies to take a significant impact on the suspension and did not damage them,” the report said.

Here’s what to expect:

Earnings: The consensus of 18 Wall Street analysts surveyed by FactSet is demanding that GAAP lose $ 2.01 per GM stake, which would run counter to GAAP earnings of $ 1.66 per share in 2019. In the second quarter. Analysts expect an adjusted loss of $ 1.77 per share, after adjusted earnings per share of $ 1.64 a year ago.

In the case of Ford, 19 analysts expect GAAP to lose $ 1.26 per share compared to 4 cents in EPS in 2019. In the second quarter. Analysts are calling for an adjustment of $ 1.17 per share loss for the quarter, compared to an adjusted 28-cent gain. part a year ago.

Estimize, a crowd resource search platform that aggregates estimates from Wall Street analysts as well as buyer analysts, fund managers, executives, academics and others, expects adjustments to be made to $ 1.61 worth of GM shares and $ 1.04. ” Ford losses.

Revenue: Analysts surveyed by FactSet expect GM sales to be $ 16.2 billion, up from $ 36.1 billion a year ago. In the case of Ford, FactSet agrees that sales are $ 19.4 billion, up from $ 38.9 billion a year ago.

Estimate that revenue will be $ 16.5 billion for GM and $ 20.5 billion for Ford.

Stock movement: So far this year, GM shares have fallen 28% and Ford’s 25%. This compares with a loss of around 7% for the Dow Jones Industrial Average DJIA,
-0.77 percent,
and the profitability of the S&P 500 index SPX,
-0.64 percent.
during the same period.

What to expect: On Tuesday, the automotive industry cut its “unprecedented” by 45 percent. Analysts at Deustche Bank wrote on Tuesday in the second quarter.

U.S. retail vehicle sales have recovered closer than before COVID, but the recurrence of cases creates uncertainty for the outlook for automakers and related industries.

GM investors will closely monitor the second-quarter cash burn and the current capital structure, a spokesman for Mainstay’s Kudla said.

Burns for the quarter are projected to reach $ 7 billion to $ 9 billion, but that number is likely to be better due to better-than-expected end-of-quarter sales, he said.

Earlier this month, GM reported quarterly sales down 34%, but said retail volumes rebounded sharply in May and June compared to April.

Ford could also surprise markets upside down, analysts at Deutsche Bank said. This will be due to “higher North American truck production per quarter than initially expected, and Ford Credit may benefit more than the expected higher residual values,” they said.

In a recent report, Goldman Sachs analysts also sounded more positive remarks from Ford and GM. They point to improving sales prospects; a mixed shift to pickups and SUVs that offer better profit margins; and higher margins in their financial business as some reasons for better hopes.

“Against this background, we still expect both companies’ 2Q cash to be weak given the challenging macroeconomic environment for the quarter triggered by COVID-19,” Goldman analysts said.


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