Analyst Note| David Whiston, CFA, CPA, CFE |
It’s not surprising that General Motors’ third-quarter results were held back by rising steel costs and the chip shortage, but it still posted adjusted diluted EPS of $1.52 to beat Refinitiv consensus of $0.96. We are disappointed to see the stock fall about 5% after the release, but it appears that the fourth-quarter Refinitiv consensus for adjusted EBIT of $2.68 billion will not be met because GM is tracking for that metric to be as much as about $2 billion. We don’t see a reason to change our fair value estimate on fourth-quarter expectations falling short. Third-quarter EBIT also received a roughly $700 million net favorable impact from $1.9 billion of Bolt recall cost recoveries from supplier LG, but we calculate that GM would still have easily beaten consensus without that recovery.