Steel Costs Hit GM's 2018 Guidance and We See Too Many Factors Beyond Management's Control
Although GM beat consensus in its second-quarter results with adjusted diluted EPS excluding GM Korea restructuring charges of $1.81 versus $1.78 market expectations, the stock fell about 7% the morning of July 25 due to management reducing its 2018 adjusted EPS guidance to a range of $5.80-$6.20 from $6.30-$6.60. This was driven by an additional $1 billion in steel and aluminum (mostly steel) headwinds than management previously expected and currency devaluations in Argentina and Brazil against...General Motors designs, builds and sells trucks, crossovers, cars and automobile parts. The company also provides automotive financing services through its subsidiary, General Motors Financial Company, Inc. (GM Financial). GM Financial provides retail loan and lease lending across the credit spectrum. GM Financial provides commercial lending products to dealers including new and used vehicle inventory floorplan financing and dealer loans, which are loans to finance improvements to dealership facilities, to provide working capital, and to purchase and/or finance dealership real estate. Other commercial lending products include financing for parts and accessories, dealer fleets and storage centers.
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