General Motors Intrinsic Stock Value – General Motors: Splurging on Buybacks Despite Weaknesses
December 20, 2023
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General Motors ($NYSE:GM) (GM) has seen a significant amount of stock buybacks in recent years, despite the company’s continuing weaknesses, making it an average investment at best. It designs, manufactures, markets, and distributes vehicles and vehicle parts, and offers financial services through its GM Financial division. In spite of its long history, GM has been struggling to make profits lately due to increasing competition from international rivals such as Toyota and Volkswagen, as well as rising operating costs. Despite these weaknesses, GM continues to invest heavily in stock buybacks.
This strategy has improved the company’s share price in the short-term, but has failed to address its broader financial issues. As a result, GM remains an average investment due to its reliance on buybacks despite weaknesses.
Stock Price
Despite some weaknesses in its stock price, General Motors (GM) still decided to splurge on buybacks. On Tuesday, the company’s stock opened at $35.5 and closed at $35.9, up by 1.2% from the prior closing price of $35.4. This indicates that GM is confident in its future prospects and is ready to invest in itself through stock buybacks.
GM’s decision to invest in itself, while investors remain cautious, shows its desire to increase shareholder value and to increase its stock price. This indicates that GM still believes in its long-term success and is willing to use any available resources to make that happen. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for General Motors. More…
| Total Revenues | Net Income | Net Margin |
| 171.97k | 9.93k | 5.9% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for General Motors. More…
| Operations | Investing | Financing |
| 22.9k | -19.01k | 1.51k |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for General Motors. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 281.7k | 202.98k | 54.38 |
Key Ratios Snapshot
Some of the financial key ratios for General Motors are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 14.1% | 49.1% | 7.5% |
| FCF Margin | ROE | ROA |
| -0.5% | 11.0% | 2.8% |
Analysis – General Motors Intrinsic Stock Value
At GoodWhale, we have conducted an analysis of GENERAL MOTORS‘s fundamentals and our proprietary Valuation Line has calculated the fair value of their share at around $55.8. We believe that the shares are currently trading at a price of $35.9, which is undervalued by 35.6%. This presents an opportunity for investors to purchase the stock at a discount. Our analysis shows that GENERAL MOTORS is a strong company and a good long-term investment. The company has sound fundamentals and a healthy balance sheet, making it a promising option for investors looking to take advantage of this opportunity. More…
Peers
General Motors Co, Stellantis NV, Toyota Motor Corp, and Ford Motor Co are all leading automobile manufacturers. They each have their own unique history and strengths, but they are all competitive in the market today.
– Stellantis NV ($NYSE:STLA)
Stellantis NV is a holding company that was created in 2021 through the merger of Fiat Chrysler Automobiles and Groupe PSA. The company is headquartered in the Netherlands and is majority owned by the French automaker Groupe PSA. Stellantis is the fourth-largest automaker in the world by sales, with a portfolio of 14 brands that include Fiat, Chrysler, Jeep, Dodge, Ram, Alfa Romeo, Lancia, Maserati, Peugeot, Citroën, DS, Opel, and Vauxhall.
– Toyota Motor Corp ($TSE:7203)
Toyota Motor Corp is a Japanese multinational corporation that manufactures vehicles. It has a market cap of 27.43T as of 2022 and a Return on Equity of 11.32%. The company produces vehicles under five brands, including Toyota, Lexus, Daihatsu, and Hino.
– Ford Motor Co ($NYSE:F)
Founded in 1903, Ford Motor Company is an American multinational automaker that has its main headquarters in Dearborn, Michigan. The company sells automobiles and commercial vehicles under the Ford brand and most luxury cars under the Lincoln brand. Ford also owns Brazilian SUV manufacturer Troller, an 8% stake in Aston Martin of the United Kingdom, and a 49% stake in Jiangling Motors of China. It also has joint-ventures in China, Taiwan, Thailand, Turkey, and Russia. The company is listed on the New York Stock Exchange and is controlled by the Ford family; they have minority ownership but the majority of the voting power.
As of 2022, Ford Motor Company’s market capitalization is $47.32 billion, and it has a return on equity of 23.7%. The company’s main business is the manufacture and sale of automobiles and light trucks. In addition to its core automotive business, Ford also operates in the financial services sector through its Ford Motor Credit Company subsidiary.
Summary
General Motors (GM) is an American automobile manufacturer. While the company has been spending significantly on buybacks in recent years, weaknesses remain which make GM a mediocre play for investors. The company’s stock performance has been volatile, with GM showing signs of improvement but failing to maintain momentum. Its balance sheet is also weak, with a high amount of debt and low cash balance.
GM’s return on equity is lower than its industry peers, and the company faces competition from other manufacturers. Therefore, investors should be wary of GM as a potential investment, as there is risk of the stock losing value if the company’s weaknesses are not addressed.
