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GM: Will The Stock Move Higher?

2:53 pm ET, 09 Apr 2018

The General Motors (NYSE: GM) stock moved up about 1% today. The automaker lost some value in the broader market correction.  What is the forecast for this stock? 

Here is what you need to know about GM today (for the latest stock news go to Finstead and type 'GM news').

The company has witnessed a lower sales growth. 79 million cars were sold in 2017.  The company forecasted 81.6 million for 2018, which is just a 3.3% rise. The domestic auto market in the US is in an almost stagnant condition since 2015.

Though China is a huge automotive market, it doesn't have much-needed consistency. Also, President Trump's geopolitical play might further destabilize the General Motors stock.

Tesla's incident involving a deadly crash (because of its autopilot feature) has caused a negative impact on the whole auto sector

GM incurred an $8.1 Billion R&D expenditure last year, which was the highest in the world. This was done to pursue the industry opportunity. But the driverless vehicle is preferred by only about a half of various surveys’ respondents. Consumers’ negative perception of the driverless car can definitely cause the GM stock to further decline.

The declining demand for the Spark minicar led the Company to a decision to replace it with a crossover. Spark faced a 36% dip in sales in the US market alone last year.

In February, GM had plans to shut down a South Korean factory and consider 3 other plants' operational viability in the region. The South Korean government's support and concessions for its local union are the factors on which the crossover production plan depends (this model is tapped for production in 2020).

What are the chances of the GM stock climbing further up? Per Finstead Research, the GM stock has an average price target of almost $49. It has an upside of around 28%.

The General Motors stock has a fairly low valuation. Its forward P/E ratio is ahead of that of FCAU but behind those of PCAR, OSK, and WBC.   

Elon Musk's Stock Options: Good or Bad for Tesla (TSLA)?

4:27 pm ET, 21 Mar 2018

Tesla's shares are up by 2% today, almost wiping off the losses for the year.

Elon Musk got what he asked for today: the shareholders approved to grant him stock options worth $2.6 Billion. This will be possible if Tesla manages to sustain its growth trajectory in the upcoming years.

Some of the Tesla's major investors are of the opinion that the award is necessary for gearing up the business. Per new plan, the options will be earned for the fulfillment of goals related to the market value, revenue, and earnings

In order for Musk to get all the options, Tesla's market cap has to be $650 Billion, which is more than Facebook’s market cap, and its revenue has to be more than P&G’s revenue. If Tesla succeeds in accomplishing those goals, Musk will get more than $50 Billion in equity grants.

Some critics hold a negative opinion towards this plan because it increases the company's expenses and dilutes the existing shareholders' stake. Musk's involvement in various other projects creates concerns around his lack of commitment to Tesla, but the award ensures he’d be in a driving seat for a decade.

Finstead doesn’t predict much of an upside for Tesla's price.  According to Finstead research, Tesla’s average price target is around $317.

Tesla’s valuation is negative because the company is not profitable. Trading shares of unprofitable companies is a highly speculative activity.

Tesla's Short Share of Float is higher than the average for the industry which means the share price is likely to be volatile. 

Over the last year, TSLA returned +18.57%. This return is higher than the Auto Manufacturers sector (8.97%), Consumer Goods industry (5.13%), and S&P 500 (14.47%) returns.

Tesla: What You Need To Know Prior To Earnings Results Today

1:08 pm ET, 07 Feb 2018

Tesla (NASDAQ: TSLA) is up 2% mid-day today ahead of its earnings report post market close.  Based on Finstead research, TSLA price target upside is -9.04% (visit Finstead and type "TSLA upside").   

Here are some things you should know about Tesla prior to the earnings release. 

Tesla is far away from a profitable company.  Per Elon Musk, profits can be realized only after Model 3 enters full-scale production. Investments in new vehicles development, technologies, and retail network build-out are the reasons for anticipating losses.

Production bottlenecks have led Tesla to miss its target of 1500 Model 3s in 2017.  Tesla's dependency on a single source to obtain components is limiting its production capacity.

The lithium-ion battery also remains a problem.

In order to meet the demand and sustain high growth, Tesla is investing in Model X and Model 3 development, Gigafactory construction, sales expansion, as well as building supercharger infrastructure.

Investors continue to be dubious regarding Tesla's SolarCity acquisition as they feel that the debt and cash flows of SolarCity would further deteriorate Tesla’s financial position. The acquisition of SolarCity has prompted 4 Tesla shareholders to file lawsuits against it, which will likely result in increased expenses (e.g., costs related to the indemnification of the directors) for Tesla.

The prohibition of direct sales by automakers and mandatory use of franchised dealers in certain U.S. states negatively impacts Tesla’s sales.  Tesla employs direct sales only.

Relatively high prices of Tesla models have resulted in low market penetration.  Fixed expenses such as marketing costs and R&D increases are becoming more pronounced because of the reduced sales volume. High operational expenses make Tesla look vulnerable compared to large-scale manufacturers such as General Motors and Ford.

The absence of sufficient charging points is a major hindrance for the potential buyers—and that impacts the international expansion of Tesla.

Over the last year, TSLA returned +32.55%.  This return is higher than Auto Manufacturers industry (20.38%), Consumer Goods industry (7.65%), and S&P 500 (15.30%) returns.

GM's Autonomous Vehicle Strategy Is Delightfully Smart

4:09 am ET, 04 Dec 2017

autonomous vehicles

General Motors (NYSE: GM) is stepping up its investments in Transportation As A Service (TAAS).

TAAS, with autonomous vehicles (AVs), is a ride-hailing business competing with the likes of Uber and Lyft.  GM already owns about 9% of Lyft, and it will be ready to deploy AVs in a commercial service at scale in dense urban environments in 2019.  The first cities to get the service will be San Francisco and New York.  Phoenix is also a possibility since GM already tests AVs there.

General Motors has increased its focus on complex driving in San Francisco with its Cruise subsidiary.  Vehicles can learn the most in a dense city, as GM’s data shows its fleet of 180 Chevrolet Bolts encounters special situations such as emergency vehicles up to 46 times more often in San Francisco than in suburban Phoenix. GM will expand testing to New York City in 2018. 

All GM Autonomous Vehicles (AVs) will be pure electric vehicles (Battery Electric Vehicles, or BEVs) as GM feels the AV hardware can be more easily integrated into a BEV than into a hybrid or internal combustion vehicle. GM will have two new BEV crossovers by 2020 and will have at least 20 new BEVs launched by 2023. A new battery platform in 2021 will help drive GM’s BEV costs down by over 30%. 

Over the last year, GM has returned +18.62%. This return is higher than Consumer Goods sector (9.94%) but lower than Auto Manufacturers industry (28.38%) and S&P 500 (20.59%) returns.

General Motors Company (GM) Stock Guide

Updated at: 7:40 pm ET, 13 Nov 2020

Before we start: if you're looking for GM stock price, you can quickly find it out by visiting Finny and typing "GM quote". If you're looking for a quick scoop on GM stock (chart, price target, market cap, news and buy or sell analysis), go to Finny and look for "GM". You'll get all this info in one place. Or you can just type "GM news" to get the latest stock news.

Looking to buy or sell General Motors Company (GM)? Interested in getting the full scoop on GM, including earnings and dividends, stock forecast, buy or sell analysis and key stats? If so, you came to the right place.

In this GM stock guide, we'll address key questions about GM, above and beyond what you can find on Yahoo Finance, Zacks, MarketWatch or Morningstar.

Here is what you'll be able to find in this guide:

Earnings and Dividends: earnings, earnings date, dividend rate and dividend yield;
Analyst Predictions: stock forecast and analyst ratings;
Analysis: Finny Score and buy or sell analysis;
Key Stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio, industry, sector, and number of employees.

And here is the list of questions we'll answer:
1. What are GM earnings?
2. When is GM earnings date?
3. What is GM stock forecast (i.e., prediction)?
4. GM buy or sell? What is GM Finny Score?
5. What are the reasons to buy GM? Why should I buy GM stock?
6. What are the reasons to sell GM? Why should I sell GM stock?
7. What are GM key stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

So let's start. Scroll down to the question that interests you the most.

Earnings and Dividends

1. What are GM earnings?

GM trailing 12-month earnings per share (EPS) is $1.06.

2. When is GM earnings date?

GM earnings date is February 10, 2021.

Analyst Predictions

3. What is GM stock forecast (i.e., prediction)?

Based on GM analyst price targets, GM stock forecast is $42.35 (for a year from now). That means the average analyst price target for GM stock is $42.35. The prediction is based on 24 analyst estimates.

The low price target for GM is $27.00, while the high price target is $72.00.

GM analyst rating is Hold.


4. GM buy or sell? What is GM Finny Score?

#{finnyScore:43}Our quantitative analysis shows 3 reasons to buy and 4 reasons to sell GM, resulting in Finny Score of 43.

5. What are the reasons to buy GM? Why should I buy GM stock?

Here are the reasons to buy GM stock:

  • GMNA's break-even point of about 10 million-11 million units is drastically lower than it was under the old GM. The company's earnings should grow rapidly as GM becomes more cost-efficient.
  • GM's U.S. hourly labor cost is about $5 billion compared with about $16 billion in 2005 under the old GM.
  • GM can charge thousands of dollars more per vehicle in certain segments. Higher prices with fewer incentive dollars allow GM to get more margin per vehicle, which helps mitigate a severe decline in light-vehicle sales and falling market share.
  • In 2017, General Motors recorded adjusted earnings of $6.62 per share, up 8.2% from that of prior-year quarter. Moreover, this came in higher than the expected 2017 adjusted earnings per share of $6.00 to $6.50. For 2018, the company projects robust earnings, mainly on the back of strength in North America, China and South America, growth in GM Financial segment, and continued cost efficiencies.
  • General Motors follows a comprehensive capital allocation strategy per which it intends to return its available free cash flow to shareholders while maintaining an investment-grade balance sheet and cash and cash equivalents of $15.5 billion as of December 31, 2017 to boost long-term growth. As part of this strategy, General Motors announced an initial share repurchase of $5 billion, which was completed in third-quarter 2016. In the second-quarter 2017, General Motors repurchased $1.5 billion of common shares.
  • The automaker strives to excel in its products and technology, expand the Chevrolet and Cadillac brands globally, grow its presence in China and boost the results of the GM Financial segment. Further, General Motors will focus on ensuring cost efficiency and expects to reduce costs by over $5.5 billion by curtailing purchasing, manufacturing and administration expenses from 2015 through 2018. This will offset the investments made toward the launch of new products, brand building, engineering and technology upgrades.
  • General Motors is increasing capacity investment in emerging markets to enhance its global sales. The company expects half of the global sales growth by 2030 to come from emerging markets. The company is trying to gain from growth in emerging countries via product launches and the new Wuling plant.
  • General Motors is undertaking several initiatives to make its vehicles more advanced, safer and fuel efficient. The automaker is presently focusing on autonomous vehicle development. The acquisition of Cruise Automation will help General Motors to use Cruise’s deep software talent to develop autonomous vehicle technology.
  • General Motors established its Cadillac brand as a separate business unit with global headquarters in New York. This will help the company capitalize on opportunities in the luxury automotive market and expand the brand’s presence outside North America. The initiative to launch a range of new Cadillac products is likely to help the company achieve global growth.
  • In October 2017, General Motors announced its plans to stop manufacturing gasoline and diesel in future and focus more on the development of electric vehicles. In line with the plan, it expects to roll out two new electric vehicles (EVs) in the next 18 months. In addition to that, General Motors will be adding 20 electric or hydrogen fuel cell vehicles in the market by 2023.
  • GM forward P/E ratio is 7.35, which is low compared to its industry peers’ P/E ratios. See GM forward P/E ratio chart.
  • GM Price/Sales ratio is 0.43, which is low compared to its industry peers’ P/S ratios. See GM forward Price/Sales ratio chart.
  • GM cash to debt ratio is 0.24, higher than the average industry (0.06) and sector (0.13) cash to debt ratio. See GM cash to debt chart.

6. What are the reasons to sell GM? Why should I sell GM stock?

Let's look at the reasons to sell GM stock (i.e., the bear case):

  • The cadence of a recovery in global vehicle demand is very uncertain.
  • Auto stocks are often sold off severely because of macroeconomic concerns--even if the bottom-up story looks attractive.
  • The U.S. auto market is becoming more crowded each year. Hyundai, Tesla, and other firms may take more share over time from existing players such as GM.
  • General Motors has been forced to scale down or shut its manufacturing operations in some regions due to production constraints such as high costs and unfavorable currency translation effects. General Motors decided to stop vehicle and engine production, and cut down engineering operations in Australia by 2017 end due to the strength of the Australian dollar against the American dollar, high production costs, limited domestic market and stiff competition.
  • Low oil prices and currency controls in Venezuela have led to a deficiency of the dollar in the South American nation. As a result, the market remains quite challenging for General Motors.
  • Lately, General Motors has been recalling vehicles in large numbers. In 2016, faulty Takata airbag inflators resulted in massive recalls by the company. In May 2016, General recalled 1.9 million vehicles for this problem, which was expanded by an additional 600,000 vehicles in June 2016.
  • The company is expected to face weak used car pricing, a challenging pricing environment in the United States and China as well as more pressure on commodity costs.
  • The company has been experiencing a high inventory level of passenger cars. It is working toward bringing the inventory down by cutting production.
  • GM stock price ($41.19) is at the 52-week high. Perhaps now is a good time to sell? See GM price chart.
  • GM quarterly revenue growth was -53.50%, lower than the industry and sector average revenue growth (-0.44% and 0.35%, respectively). See GM revenue growth chart.
  • GM profitability is declining. The YoY profit margin change was -8.33 percentage points. See GM profitability chart.
  • GM PEG ratio (P/E adjusted for growth) is 4.43, which is high compared to its industry peers’ PEG ratios. See GM PEG chart.

Key Stats

7. What are GM key stats : revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

Let's look at the key statistics for GM:

Metrics GM
Price $44.68
Average Price Target / Upside $42.35 / -5.21%
Average Analyst Rating Hold
Forward Dividend Yield 0.00%
Industry Auto Manufacturers
Sector Consumer Cyclical
Number of Employees 173,000
Market Cap $63.95B
Forward P/E Ratio 7.57
Price/Book Ratio 0.55
Revenue (TTM) $115.79B
YoY Quarterly Revenue Growth 0.00%
Profit Margin 2.92%

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