GM Remains Bullish on Strong Rise in Deliveries

GM Remains Bullish on Strong Rise in Deliveries
October 11, 2016

The stock of automobile manufacturer General Motors Co. (NYSE:GM) has been trading in a range of $30 to $33 for several months as of now. The company is scheduled to report its fiscal 2016 third-quarter earnings on October 25. After reporting splendid results in the second-quarter, the investors obviously expect the company to put up a good show once again. To understand whether GM is on track to report another quarter of exceptional performance, let us study the recent developments related to the company.

The Detroit, Michigan-based company reported second-quarter net income of $2.9 billion or $1.81 per share on revenue of $42.4 billion. In the similar quarter last year, GM recorded net income of $1.1 billion or $0.67 per share on revenue of $38.2 billion. Excluding the impact of special items, on a non-GAAP basis, the Q2 2016 diluted EPS was $1.86, compared to $1.29 in Q2 2015. The Zacks analysts anticipated earnings of $1.52 per share on revenue of $39.09 billion.

In July, GM delivered 270,529 vehicles, up 18% y-o-y, in China. Again in August, the company delivered a record 293,537 vehicles. So far in 2016, the company has delivered more than 2 million vehicles. In the US, the company sold 212,915 vehicles in August, down 5% on a y-o-y basis, but in line with the estimates. The Chevrolet’s market share rose 0.4% to 11% in August. Globally, the sales of Cadillac sales increased 23.7% to 28,228 vehicles in August. In September, the sales figure of Cadillac increased to 30,061, up 22.2% on a y-o-y basis. It was the fourth consecutive month of double-digit

Banking on the strong demand for Chevrolet, Buick, and Cadillac vehicles, the company reported sales of 204,449 vehicles in September. Furthermore, the market share of GM increased 0.4% to 16.6% in the US. It is the largest gain recorded by a full-line manufacturer. The company has reported a gain in the market share in 15 of the past 18 months.

Considering the rising demand for its vehicles, the General Motors raised its FY16 earnings expectation to a range of $5.50 to $6.00 per share, from the prior estimates of $5.25 to $5.75 per share. The company reported FY16 earnings of $5.02 per share in 2015.

The price chart indicates that the buying support for the stock exists at 32. By staying above the zero line, the MACD indicator represents bullishness in the scrip. On the higher side, resistance can be expected from sellers and speculators at 36.
General Motors - Technical Analysis - 11th October 2016
Thus, one of the simplest ways to gain from a probable uptrend in the stock is through the purchase of a one touch call option from a reliable binary broker. The strike price for the stock should be about $36, while the expiry date can be anywhere between the 10th and 15th of November.


Andrew Wright

Prior to founding in 2014, Andrew worked as a proprietary trader, then as a market maker. As a market maker, he traded options in over 100 stocks, he then began trading currency pairs in 2013. Andrew still actively trades both, and prides himself on educating and informing traders on the benefits of both Binary Options and Forex.

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