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Big US automakers, including Ford Motor Co. and General Motors Co, will be releasing their quarterly earnings reports this week.
What’s the outlook for auto stocks?
The outlook for the auto industry is not so good, given that Wall Street expects a steep decline in earnings next year.
Both US and European auto companies are expected to witness earning declines during 2023, as weakness in overall demand results in an oversupply of autos, according to UBS Group AG. Analysts at RBC Capital Markets say that expectations for the sector for 2023 need to be lowered materially.
Shares of Ford and General Motors have tumbled around 46% each since the start of the year, as the markets remained worried regarding supply-chain issues and surging costs. UBS recently downgraded Ford from Neutral to Sell and lowered the price target from $13 to $10, while GM was downgraded from Buy to Neutral, with UBS cutting the price target from $56 to $38.
What’s expected from Ford and GM this quarter?
Ford recently reported an 8.9% drop in US vehicle sales for September, with retail sales dipping 11.7%. The electric-vehicle segment was the only bright spot for the company, with total US sales surging 197.3%. Ford is expected to have earned $0.32 per share in Q3, down from $0.51 per share in the year-ago period. Revenue is expected to come in at $36 billion for the quarter.
General Motors recently said that the company and its joint ventures delivered around 630,000 vehicles in China during the third quarter, steadily rebounding from the Covid-19 impact felt in the first half of the year. Analysts expect GM to report earnings of $1.89 per share, up from $1.52 per share a year ago, on revenue of $41.88 billion.
How to trade earnings report of auto stocks
You can make the most of share price movements of auto giants without owning the individual stocks. This is because trading Share CFDs do not require you to own the underlying stock. You could also consider ETFs, which invest in a basket of securities, such as stocks from a specific sector or an index.
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