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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