4 Key Takeaways From General Motors' Solid Q2 Results
Investors will have to take headlines regarding General Motors' (NYSE: GM) second quarter with a grain of salt. It's true that the automaker's net profit fell more than 40%, as the sale of its European unit weighed on results. But it's also true that, stripping out those one-time items, GM's adjusted earnings per share increased 5.6% year over year to $1.89 per share, which easily topped analysts' estimates of $1.69 per share. Let's dig into that, as well as three other important takeaways from GM's second quarter.
It's worth clearing up why GM's net profit fell so much despite the company posting adjusted EPS improvements. GM agreed to sell its European operations in March for $2.2 billion, and it expects to take a $5.5 billion to $6 billion charge from that development. A big chunk of that will be a charge for $3.9 billion in previous losses that GM will no longer be able to carry forward to offset tax obligations on net income. Net income during the second quarter included a $770 million loss for its European operations as well as $654 million largely from its restructuring in India and the sale of its South Africa business. Expect more negative net income impact from the European operations sale, but that's why the adjusted numbers are used in analysts' estimates.
GM Renaissance Center headquarters in Detroit. Image source: General Motors.
Source: Fool.com
General Motors Corp Stock
Currently there is a rather positive sentiment for General Motors Corp with 37 Buy predictions and 7 Sell predictions.
With a target price of 48 € there is a slightly positive potential of 18.14% for General Motors Corp compared to the current price of 40.63 €.
