General Motors Co. is beginning to surprise investors, not just by exceeding Wall Street estimates but by how they beat those projections.

The automaker’s third-quarter profit did so not just because of strong U.S. truck sales, said Barclays analyst Brian Johnson. GM produced a record $3.1 billion in adjusted earnings before interest and taxes both with cost cuts worldwide and by shifting sales to more expensive models in China, keeping profits stable even as the most-coveted car market has slowed.

In the past two quarters, the company has shown that it can run the business better than the GM of old and deliver on promises. Investors may be starting to take notice: The stock climbed 5.8 percent Wednesday, its biggest daily gain since December 2012.

The company reported that adjusted earnings per share were $1.50, compared with the $1.19 average of 16 analyst estimates. GM credited strong margins in North America and only a slight decline in China, where auto sales have struggled.

GM’s results highlighted two major points. Chief Financial Officer Chuck Stevens said earlier in the year that the company could sustain profits in China even as the market slowed. He also said GM could get better than 10 percent margins in North America next year, and he delivered this year.

David Fuller's view

This was arguably the most important earnings story on Wall Street today.

General Motors has staged a storming recovery since the widespread climactic slide on 24^th August.  Nevertheless, the share is still cheap (est p/e 7.83 & yield 4.07%, according to Bloomberg.  The earnings are coming from the US and China, while GM continues to lose money in Europe and South America.  Those regions should improve over the medium to longer-term, if you share my view that the global economy will strengthen over the next three years.

Meanwhile, is General Motors performance good for the country?  I can remember some indignation in 1953 when Charles Erwin Wilson, formerly CEO of GM and candidate for US Secretary of Defense during the Eisenhower administration was quoted as saying during his confirmation hearings before the Senate Armed Services Committee: “What’s good for General Motors is good for the country.” 

It was a misquote because when asked the hypothetical question, as Secretary of Defense could he make a decision that was adverse to the interests of General Motors, he replied yes but that he could not conceive of this situation, “because for years I thought what was good for our country was good for General Motors, and vice versa”. 

Paraphrasing the two quotes today: are General Motors’ latest earnings and share recovery a good indication for the country, my answer is yes.  Moreover, so are the performances of all performing US Autonomies, a number of which are leading the US stock market higher.