Business Corpus: GM Stock Powers Above Key Support After Blowout EarningsGM earnings jumped to $1.87 a share in the third quarter, defying views for a drop to $1.26. General Motors revenue also unexpectedly rose. GM stock soared. The post GM Stock Powers Above Key Support After Blowout Earnings appeared first on Investor's Business Daily.

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General Motors (GM) reported better-than-expected earnings and sales before the open, after Fiat Chrysler (FCAU) and Tesla (TSLA) beat, and Ford Motor (F) saw stronger-than-expected sales. GM stock rallied early Wednesday.

GM Earnings

Estimates: GM earnings per share to slip 5% to $1.26 as revenue dips 2% to $34.21 billion, according to Zacks Investment Research.

Results: GM earnings of $1.87 adjusted as sales rose 6.5% to $35.8 billion. GM cited strong China results while new full-size trucks and crossovers fueled North America demand.

North America sales rose 11.4% to $27.65 billion, though U.S. retail unit sales dropped 11% to 695,000 vehicles. International sales fell 18% to $4.58 billion. GM reported no revenue for its Cruise self-diving car segment, but its adjusted loss widened to $214 million from $165 million.

So far it doesn't seem that higher interest rates, the impact of Trump tariffs, rising gas prices and other possible headwinds are affecting GM in North America.

GM did offer buyouts to 18,000 white-collar employees. The offer is salaried workers in North America with at least 12 years of experience. GM has a total of 50,000 salaried employees in North America.

Outlook: General Motors sees full-year EPS hitting the high end of its guidance for $5.80-$6.20. That's above the Zacks consensus of $5.92, though GM just beat Q3 by 61 cents.

GM Stock Soars

Shares shot up 9.1% to 36.59 on the stock market today, gapping above the 50-day moving average.

GM stock briefly punched above its 50-day line Monday on reports of the China sales tax cut on cars but closed below that key support. Its relative strength line, tracking a stock's performance against the S&P 500 index, has trended sharply downward since shares reached 45 on June 15.

GM stock has a poor IBD Composite Rating of 29.

GM Earnings Call

In international markets, GM sees across-the-board improvements as it capitalizes on luxury vehicle demand in China, takes costs out in South America; and restructures in South Korea.

CEO Mary Barra said GM is watching reports of Chinese stimulus measures (50% auto tax cut) closely.

"Obviously that would be a very good measure from an industry perspective," she said. GM reiterated a $1 billion year-over-year commodity headwind in 2019 over 2018, "based on spot prices that existed at the time of second-quarter call."

Responding to an analyst question about the rising interest rates' impact on GM Financial, CFO Suryadevara said GM continues to "risk manage" the GM Financial business. GM saw record Q3 revenue and earnings for its lending and leasing unit. GM Financial will pay a $400 million dividend to parent GM in Q4, with those dividends continuing in 2019.

Auto Stocks Sit In A Bear Market

Ahead of GM earnings Wednesday, investors braced for the impact of trade wars and tariffs on material costs.

In Q3, General Motors' U.S. auto sales tumbled 11% year over year. But average transaction prices rose, thanks to demand for SUVs and trucks.

Leading auto stocks sit in a bear market, battered by rising interest rates, President Trump's trade war and other industry headwinds. Car sales have cooled despite a robust economy.

Ford Motor (F) earnings delivered rare good news last week. The GM rival reported better-than-expected sales Oct. 24, though EPS was in line, helping Ford stock come off multiyear lows.

On Tuesday, Fiat Chrysler (FCAU) reported better-than-expected earnings, but shares fell 3.9%. The carmaker took a one-time charge to cover possible costs in a U.S. diesel probe.

Despite headwinds, General Motors continues to lead the industry on new technologies, such as electrification and autonomous driving.

GM now seeks a national sales mandate for electric vehicles and plans to launch a robotaxi service next year.

Last week, luxury electric-vehicle maker Tesla reported a surprise profit. Tesla stock spiked 27% last week and is up so far this week.

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The post GM Stock Powers Above Key Support After Blowout Earnings appeared first on Investor's Business Daily.