Is General Motors Undervalued?
Yes, as per the Trefis Price estimate General Motors’ (NYSE: GM) valuation comes to $47, higher than the current market price. General Motors, or GM, was originally founded in September, 1908. They design, build, and sell trucks, crossovers, cars, and automobile parts worldwide. They also provide automotive financing services through GM Financial. The company’s major brands are Buick, Cadillac, Chevrolet, and GMC. GM’s major competitors are companies like Volkswagen, Toyota Motors, Daimler AG, Tata Motors, and Ford. In this note we discuss our stock price valuation for General Motors. You can look at our interactive dashboard analysis ~ General Motors Valuation: Cheap or Expensive? ~ for more details.
#1. Estimating GM’s Total Revenues:
- Total Revenues have increased from $147.4 billion in 2017 to $149.1 billion in 2018, but are expected to fall by 4.9% to $141.9 billion in 2019. Our Interactive Dashboard Analysis, How Does GM Make Money?, Provides An In Depth View Of The Company’s Revenues.
#2. Deriving GM’s Net Income:
- Net Income Margin has slightly improved in 2018 to 5.3% from -2.6% in 2017. In 2019 GM’s Margin is expected to be affected by the global auto market slowdown and fall to around 4.5% .
#3. Determining GM’s EPS:
- EPS has grown from $-2.59 in 2017 to $5.53 in 2018, and we estimate it to be $4.36 in 2019.
- EPS growth for 2018 can be attributed to higher Net Income and lower Shares Outstanding.
#4. Estimating GM’s Share Price:
- Our Price Estimate of $47 for GM’s Stock is based on our Detailed Valuation Model, and implies a 10.8x P/E Multiple on expected 2019 EPS of $4.36
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