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On Tuesday, shares of automaker giant General Motors Co. GM are acting sluggish, down around 3.8% in midday trading after the company reported its fiscal 2016 third quarter financial results. Despite impressive earnings, investors fear a slowdown in U.S. vehicle sales, currency instability in Europe, and uncertainly about China, in turn negatively affecting GM stock.
GM posted adjusted earnings of $1.72 per share, soaring past the Zacks Consensus Estimate of $1.44 per share and marking a third-quarter record for the company. On a reported basis, net income more than doubled, coming in at a record $2.77 billion.
Revenues for the quarter were $42.8 billion, beating our consensus estimate of $40.09 billion and gaining 10.3% year-over-year.
Looking ahead, GM expects full-year results to be on the “high end” of its previous forecast of $5.50-$6.00 per share, significantly higher than fiscal 2015’s full-year earnings of $5.02 per share.
However, it looks like its Europe business will prove difficult for GM. The company reported a third-quarter loss in Europe of about $100 million. CFO Chuck Stevens told reports that “achieving break-even results for Europe this year will be ‘very, very challenging,’” according to Reuters. When the value of the British pound drops, GM is thusly impacted, as it manufactures many vehicles in the U.K. that are sold in Germany, Spain, and other countries that use the euro.
GM is “prepared to take whatever action is necessary” to achieve its goal of returning European operations to profitability, Stevens said, but offered no specifics, according to CNBC.
GM is a Zacks Rank #3 (Hold), and shares of the company are down over 3% year-to-date.
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