Automobile manufacturer General Motors (NYSE:GM) jumped in trading after reinstating its FY23 earnings guidance. The company initially withdrew its guidance after its Q3 earnings due to labor disruptions. In addition, GM announced an accelerated share repurchase (ASR) program worth $10 billion and intends to increase its dividend by 33% beginning next year.
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The company continues to anticipate taking a hit of $1.1 billion in its adjusted Earnings Before Income and Taxes (EBIT) from the Union Auto Workers (UAW) labor strike, “primarily from lost production.” GM expects FY23 adjusted EBIT in the range of $11.7 billion to $12.7 billion compared to its prior outlook of between $12 billion and $14 billion.
Diluted adjusted earnings are likely to be in the range of $7.20 to $7.70 per share in FY23, compared to its previous outlook between $7.15 and $8.15 per share. This includes the impact of its accelerated share repurchase program (ASR).
As part of its share repurchase program, GM will advance $10 billion to the executing banks and will immediately receive and retire $6.8 billion worth of common stock. The final number of repurchased shares will depend on the average daily volume-weighted prices of GM stock during the ASR program. This program is expected to conclude in the fourth quarter of 2024.
The company anticipates raising its dividend by $0.03 per quarter to $0.12 beginning next year.
Is GM a Good Stock to Buy?
Analysts remain cautiously optimistic about GM stock, with a Moderate Buy consensus rating based on 11 Buys, five Holds, and one Sell. Year-to-date, GM stock has slid by more than 10%, and the average GM price target of $44.65 implies an upside potential of 39.2% at current levels.
