Šeštadienis, 13 balandžio, 2024
US Stocks

General Motors Company Stock Analysis

General Motors Company is a global company engaged in the development, design, and sale of automobiles, trucks, and their spare parts. It also provides financing services through its division, GM Financial.

Trademarks

The company has over 10 different brands worldwide. The goal is to strengthen each brand, passion, and loyalty towards them.

The new company retained the main brands: Chevrolet, Cadillac, GMC, and Buick. The following brands are produced in 37 countries: Holden, Wuling, JieFang. In 2009, the company discontinued the Saturn, Pontiac, and Hummer brands.

Around 215,000 employees work in the company across 120 countries.

General Motors Company aims for the Cadillac brand to become a global leader in the luxury car market. Cadillac is a separate business segment within the company. The position of the GM Financial division is also being strengthened. This is a strategic direction that allows them to be very close to their customers through financing and leasing services.

Currently, GM Financial operates in 19 countries, where approximately 80% of the company’s sales are conducted. Although General Motors Company is not a market leader, it is still a well-known global company with brands such as Chevrolet, Cadillac, Buick, Chevrolet Bolt EV, and GMC Hummer EV.

Electric vehicles

The company is actively involved in the electric vehicle sector and energy storage technologies industry. In general, it is committed to achieving complete electrification and zero-emission goals, meaning producing autonomous vehicles. The company is already building new facilities and retrofitting old ones for the production of electric vehicles.

  • General Motors Company
  • General Motors Company
  • General Motors Company
  • General Motors Company

Currently, their EVs are being developed based on the Ultium strategy. Additionally, the company is investing in the production of fuel cell-type batteries and the creation of an EV infrastructure. It is evident that the market highly values such ambitions of the company.

The company plans to produce one million electric vehicles by the year 2025.

Income by sector:

Income by sector
Income by sector

Finance

Companies in this sector constantly need to maintain a high level of technology. Therefore, they continuously invest borrowed and own funds. They have to take on a very high level of risk. The Long-term Liabilities of the company exceed its Equity by 300%. And to cover Long-term debts with Net profit by 2023 it would take approximately 10.89 years .

The company’s EPS is positive but exhibits unstable dynamics. Over the past 10 years, the average annual EPS growth has reached 11.89%. However, the 5-year average annual EPS growth has already reached 5.77%. The indicator for the past 5 years has improved, but the trend still does not satisfy us.

Invests within its competence framework. The activities of all subsidiary companies are related. Expands the range of services, but also within the competence framework. In 2023, the company extended a $11.4 billion share buyback program. About $1.4 billion remains in the program.

However, the company is able to create value for shareholders. The average annual growth of Retained profit reaches as much as 14.90%, and its profitability has increased to 15.97%. The 10-year average Return on Average Equity (ROAE) is 14.04%. This is a very good return for a manufacturing company. The continuous need for capital investment complicates the forecasting of future profits. In order for the company to earn an EPS of 0.87 USD, it needs to invest 1.00 USD in Long Term Assets.

The F_SCORE rating, as expected for a manufacturing company, is only 5. However, this is already an investment rating. It slightly improved our analysis assessment.

If the owners of the company would like to sell shares and invest today in US 10-year bonds and receive the same return as the company provided in 2023, they should sell the shares for $170 (The market price at the time of writing was $39.80)..

Investment scoreboard:

Investment scoreboard
Investment scoreboard

General Motors Company Stocks

The company’s shares are listed on the NYSE stock exchange. The ticker is GM.

The new company started paying dividends for the first time in 2014. It is declared that dividends will be announced and paid quarterly in the future. However, the amount of dividends and their payment or non-payment will depend on business and financial factors, liquidity, and/or capital requirements.

However, the company is inclined to pay smaller dividends. The average annual decrease in dividends over 10 years reaches as much as -12.52%, while the dividend yield at the time of writing was 0.92%. If you bought shares at the time of the idea’s announcement, due to the decrease in dividends, the yield is only 1.06%. In 2023, the company returned 116% of Net Income to shareholders through dividends and share buybacks.

The shares are risky. Its standard deviation is as high as 38.40%. The beta reaches 1.50.

The GRAPES method calculated price perspective is as high as 212 USD. Even Graham’s number indicates that the current market price is undervalued – 90..65 USD. The perspective of prices calculated by our method is also optimistic; in the long term, the return can reach up to 10% on average annually:

The perspective of price
The perspective of price

Stock price

Conclusions

General Motors Company shares can be an investment idea for those seeking to diversify their investment stock portfolio widely, including the automotive manufacturing sector. Moreover, indicators suggest that at the time of writing, the stock price in the market is not appropriately assessed.

From the announcement of the idea, investors received a pre-tax return of 40% or an average annual return of 4.15%. Note that the 10-year Compound Annual Growth Rate (CAGR) of GM stocks is only 0.57%. We recommend approaching the company’s stocks with caution and ACCUMULATING them.

IMPORTANT!

In your portfolio, keep only a small portion of this company’s stocks. High base interest rates have a negative impact on the company’s profitability indicators.


Company’s site

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