Shares of General Motors (GM) are down 5% after the Detroit automaker lowered its forward guidance.
For the year’s third quarter, General Motors reported earnings per share (EPS) of $3.70 U.S., which beat the $3.63 U.S. that was forecast on Wall Street.
Revenue in the period totaled $50.02 billion U.S., which topped the $48.7 billion U.S. consensus expectation of analysts.
The top and bottom-line beats were overshadowed by the fact that management at GM lowered the company’s forward guidance.
The revised guidance calls for adjusted earnings of $14.5 billion U.S. to $15.5 billion U.S., or $12.75 U.S. to $13.75 U.S. per share.
That’s down from previous guidance that had forecast earnings of $14 billion U.S. to $16 billion U.S., or $12 U.S. to $14 U.S. a share.
However, General Motors raised its estimate of free cash flow to between $11.5 billion U.S. and $12.5 billion U.S. That’s up from a previous free cash flow estimate of $9.5 billion U.S. to $11.5 billion U.S.
Management also announced a new multiyear stock buyback program worth $20 billion U.S. The company’s previous $6 billion US. share repurchase program has been completed.
The lowered guidance is due to inflation costs that are expected to add $2 billion U.S. to GM’s costs this year.
That includes higher costs for the microchips that are increasingly found in today’s vehicles.
General Motor also continues to grapple with U.S. President Donald Trump’s tariffs, which are expected to cost the automaker as much as $3.5 billion U.S. this year.
Lastly, the costs of GM’s pullback in all-electric vehicles announced last year have been “substantially completed,” according to the company.
Management said that it has recorded $11.2 billion U.S. in electric vehicle charges since the second half of last year, including paying $4.6 billion U.S. during this year’s third quarter.
Prior to today (Oct. 20), GM stock had risen 43% over the last 12 months to trade at $82.75 U.S. per share.
