General Motors has strong earnings, but investors still look for a letdown
DETROIT — General Motors earned a profit of $2.8 billion in the third quarter, exceeding Wall Street estimates and doubling its year-earlier haul, yet the automaker still saw its shares sink Tuesday as investors remain convinced that vehicle sales in North America have nowhere to go but down.
On a per-share basis, GM earned $1.72, easily beating the $1.44 per-share average estimate of 16 analysts and producing the company’s best third-quarter profit since emerging from its 2009 bankruptcy restructuring.
Yet GM shares declined 4.2 percent to a close of $31.60. That’s despite GM buying back $5 billion of its own shares, a move companies use to boost their stock when investors see it as undervalued.
Investors remain concerned that automakers will not be able to rein in production as sales decline, which would lead to bloated inventories and, in turn, large rebates and special financing offers.
Chuck Stevens, GM’s chief financial officer, acknowledged that incentive spending is increasing in the industry but said GM isn’t spending as much in the area as its competitors. He said GM is continuing to see higher transaction prices in its most profitable segments: mid-size and full-size pickup trucks.
But GM’s sales fell 4 percent overall through September in the U.S., its most lucrative market.