Earnings Could Put GM, Ford Shares on Same Track

Shares of

Ford Motor

F -0.83%


General Motors

GM -0.87%

have diverged this month, with Ford’s stock price slipping and General Motors’ rising.

Their fates could come together, however, when GM reports earnings this week, analysts said.

Ford has fallen about 6.8% in July, while GM is up 4.8%. They have both notched gains in 2019, advancing more than 20% apiece.

Ford last week reported flat second-quarter operating income and a disappointing earnings outlook.

Overall U.S. vehicle sales fell in the latest quarter and, analysts said, General Motors isn’t immune to these types of headwinds.

“In light of [Ford’s] drop after its number last week, I don’t think GM is so different from [Ford] that its earnings would be much better,” said Tom Preston, quantitative strategist at options education platform Tastytrade.

The price-to-earnings ratio, a traditional valuation measure, for the next 12 months has ticked up for Ford and GM since the end of 2018.

Options traders appear to be bracing for a big move in GM stock. They are projecting a 3.9% move after it reports its earnings before the market opens on Aug. 1, above the average 3.5% move recorded over the past eight earnings releases, according to data provider Trade Alert.

The forecast is based on a trade called a straddle, which doesn’t measure whether the stock will go up or down, only the size of the swing in either direction. A straddle entails buying both bearish and bullish options that allow investors to buy or sell stock as a specific price.

“The risk in GM earnings…are certainly to the downside,” said Shawn Cruz, manager of trader strategy at TD Ameritrade.

Write to Gunjan Banerji at Gunjan.Banerji@wsj.com

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