Why General Motors Stock Is Moving Higher Today

The Motley Fool
The Motley Fool

What happened

Shares of General Motors (NYSE: GM) were moving higher on Thursday, after the company's chief financial officer told analysts that GM now expects its full-year operating profit to come in above its previous guidance.

As of 10:30 a.m. ET, GM's shares were up about 4.3% from Wednesday's closing price.

So what

In a presentation at a Credit Suisse event for analysts on Wednesday, GM CFO Paul Jacobson boosted the company's full-year guidance for adjusted earnings before interest and tax, or "EBIT-adjusted" in GM's lingo.

"I'm pleased to say that we've experienced a little bit of favorability on costs and volumes [that] have been trending higher than we expected them to be, primarily on chip availability just from what we've seen just a few weeks ago," Jacobson said. "And consequently, our fourth quarter is coming in stronger than where we expected to be just a month ago.

"And we now see our full year EBIT adjusted in the sort of $14 billion-ish range, higher than our previous outlook of the high end of our $11.5 billion to $13.5 billion range," he said.

That's clearly good news for GM investors , and that's why the stock was higher on Thursday morning.

Amid 2021's supply chain disruptions, GM has prioritized production of its high-profit trucks. Demand has been strong, and GM's bottom line is seeing the benefits. Image source: General Motors.

Now what

Yesterday wasn't the first time that GM boosted its full-year guidance for EBIT-adjusted in 2021:

  • Back in January, Jacobson said GM expected EBIT-adjusted of between $10 billion and $11 billion.
  • In its second-quarter earnings call on Aug. 4, Jacobson boosted that range to between $11.5 billion and $13.5 billion.
  • In GM's third-quarter call on Oct. 27, Jacobson said that GM expected its full-year EBIT-adjusted to come in at the high end of that range, around $13.5 billion.

Now it's expecting even more, thanks to good cost controls and continued strong demand for its high-profit trucks and SUVs.

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John Rosevear owns shares of General Motors. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

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