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Fundamental analysis: GENERAL MOTORS #GM

GM has recently released first quarter earnings, beating analysts' expectations.

Positive results also came from competitor Ford: however, the press pointed out that General Motors may have greater growth potential, despite the shortage of semiconductors.

⚡️Growth factors:

  • J.P. Morgan believes GM is handling the chip shortage better than most other companies thanks to best-in-class efficiency and strategy - GM has been able to streamline both the supply chain and development.

  • For next year, GM expects operating income of between $ 10 and $ 11 billion in 2021, not including semiconductor shortages.

  • GE expects an EPS by the end of 2021 between $ 4.50 to $ 5.25 per share: general consensus is given at $ 5.03 per share as of December 2021.

  • In the first quarter, GM delivered approximately 642,000 vehicles in the United States.

  • Continuous investment in the “Cruise” project dedicated to autonomous driving and driver assistance services.

  • GM has among the most aggressive expansion plans in the electric car segment, with a target of 30 fully electric vehicles by 2025

📖 Financial indicators:

  • Return vs. Reference Market: GM underperformed the US auto industry, which gained 207.4% over the past year.

  • PE vs Industry: GM is good value for money based on PE ratio (9.1x) compared to the US auto industry average (27.8x).

  • Growing Profit Margin: GM's current net profit margins (7.3%) are higher than last year (3.5%).

  • Short-Term Liabilities: GM's short-term assets ($ 82.1 billion) outweigh short-term liabilities ($ 76.3 billion).

  • Long-Term Liabilities: GM's short-term assets ($ 82.1 billion) do not cover its long-term liabilities ($ 107.6 billion).

  • Interest coverage: GM's interest payments on its debt are well covered by EBIT (11.2x coverage).

Entry range: $ 58.00 - $ 57.00

Target price: $ 85.00

Stop loss: $ 49.00

OTB Global Investments

15 June 2021

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