The Street Simply Hates GM And Ford

Another earnings season has come and gone for General Motors Company GM and Ford Motor Company F, and shareholders are once again disappointed with the market’s reaction.

GM

On July 21, GM reported absolutely blowout Q2 earnings. The company delivered record earnings of $1.86 per share on revenue of $42.4 billion. Both numbers came in well ahead of Wall Street consensus estimates of $1.52 and $39.0 billion, respectively.

In addition to incredible 44 percent year-over-year earnings growth, GM upped its 2016 EPS guidance from $5.25–$5.75 to $5.50–$6.00.

In the week following the earnings report, GM’s stock is now down 2.3 percent.

Ford

Ford didn’t quite deliver the blowout earnings report that GM did. Ford delivered a strong revenue beat of $39.4 billion versus consensus estimates of $36.6 billion. However, EPS of $0.52 fell short of consensus forecasts of $0.60. While total revenue was up 6 percent year-over year, income fell 9 percent.

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Ford’s stock is down 9.6 percent in Thursday’s session.

Incredibly, the post-earnings selloffs now have GM and Ford trading at forward PEs of 5.5 and 6.7, respectively. During the biggest boom in U.S. auto sales in history, GM’s stock is down 16.2 percent in the past three years, while Ford is down 26.6.

The market reaction to the two companies’ earnings must be frustrating for investors, who continue to wonder what it will take to impress the market.

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Disclosure: The author holds no position in the stocks mentioned.

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