General Motors Company (GM) designs, builds and sells trucks, crossovers, cars, automobile parts, and accessories in several parts of the world. Its segments are GM North America, GM International, Cruise, and GM Financial.
The company’s solid financials and collaborations should help its stock survive the economic headwinds and deliver solid returns.
Looking at its recent developments, on October 12, 2022, GM and leading residential solar technology and energy services provider SunPower Corporation (SPWR) announced their collaboration to co-develop a new home energy system. This system will allow GM’s electric vehicles to provide backup energy to a home when adequately furnished.
GM has lost 34.3% year-to-date and 31.2% over the past year to close the last trading session at $39.26. However, it has gained 17.2% in the past month.
Here is what could shape GM’s performance in the near term:
Solid Financials
GM’s revenue came in at $41.89 billion for the third quarter that ended September 30, 2022, up 56.4% year-over-year. Its adjusted EBIT came in at $4.29 billion, up 46.7% year-over-year. Also, its adjusted EPS came in at $2.25, up 48% year-over-year. Moreover, its net income increased 36.6% year-over-year to $3.31 billion.
Attractive Valuation
GM’s forward EV/Sales of 0.96x is 7.1% lower than the industry average of 1.04x. Its forward EV/EBITDA of 5.75x is 32.1% lower than the industry average of 8.47x. In addition, its forward Price/Sales of 0.36x is 56.4% lower than the industry average of 0.81x, while its forward Price/Book of 0.82x is 67.3% lower than the industry average of 2.51x.
Mixed Profitability
GM’s trailing-12-month gross profit margin of 13.56% is 62.7% lower than the industry average of 36.32%.
However, its EBITDA margin of 12.24% is 10.4% higher than the industry average of 11.08%, while its trailing-12-month net income margin of 6.57% is 19.3% higher than the industry average of 5.51%.
POWR Ratings Reflect Promising Outlook
GM has an overall rating of B, which equates to a Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. GM has an A grade for Growth, in sync with its solid financials in the latest reported quarter.
The stock has a B grade for Value, consistent with its lower-than-industry valuation multiples. It has a C grade for Quality, in sync with its mixed profitability margins.
In the 63-stock Auto & Vehicle Manufacturers industry, GM is ranked #16.
Click here for the additional POWR Ratings for GM (Momentum, Stability, Sentiment).
View all the top stocks in the Auto & Vehicle Manufacturers industry here.
Bottom Line
GM reported robust financials in its latest quarter. Furthermore, analysts expect its revenue to grow 20.5% year-over-year to $153.03 billion in 2022. Given the company’s sound fundamentals, GM might be an ideal Buy this fall.
How Does General Motors Company (GM) Stack Up Against Its Peers?
While GM has an overall POWR Rating of B, one might consider looking at its industry peers, Subaru Corporation (FUJHY), Stellantis N.V. (STLA), and Jardine Cycle & Carriage Limited (JCYGY), which have an overall A (Strong Buy) rating.
GM shares were trading at $38.86 per share on Friday afternoon, up $0.35 (+0.91%). Year-to-date, GM has declined -33.57%, versus a -20.76% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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