Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  Equities  >  Nyse  >  General Motors Corporation    GM

GENERAL MOTORS CORPORATION (GM)
My previous session
Most popular
  Report  
SummaryQuotesChartsNewsAnalysisCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsOfficial PublicationsSector newsTweets

GM's Recent Moves Give Shares a Lift -- WSJ

share with twitter share with LinkedIn share with facebook
share via e-mail
0
10/23/2017 | 08:48am CEST

Bets on driverless-car efforts, new industry technologies help to dispel 'dinosaur' image

By John D. Stoll 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (October 23, 2017).

After spending years frustrated by Wall Street's lack of interest in record profits, a fortress balance sheet and a revamped approach to selling cars, General Motors Co. has decided to change its story. And investors are finally listening.

GM reports third-quarter earnings Tuesday following a flurry of announcements about rapid advances in driverless-car development. The company's share price -- stuck in neutral during Chief Executive Mary Barra's nearly four-year tenure -- is springing to life, trading well above the previous highs notched since GM's 2010 initial public offering.

The company's $66.5 billion market value firmly outpaces Ford Motor Co., whose shares have languished in recent years, and Fiat Chrysler Automobiles, which is valued far below GM but trading near a several-year high amid rampant takeover rumors. But more important than beating Detroit rivals, the largest U.S. auto maker appears to be lapping Tesla Inc., a small electric-vehicle maker held up as the auto industry's future.

Tesla, founded by billionaire Elon Musk, stole the crown as highest-valued domestic auto maker earlier this year. Production hiccups with its new Model 3 mass-market sedan, however, have dampened enthusiasm for Mr. Musk's plan.

"We see potential for investors, both auto and non-auto, to view GM's progress and Tesla's production challenges as a sign that some of Tesla's market cap needs to go back to GM," Barclays auto analyst Brian Johnson wrote in a recent note to investors. GM has been underestimated in the emerging automotive tech race, he said, and shouldn't necessarily take a back seat to Silicon Valley's newcomers, including Alphabet Inc.'s Waymo and Uber Technologies Inc.

A GM spokesman said that while the company is pleased with its recent share gains, it continues to believe the stock is undervalued. GM remains focused on "delivering strong and consistent results" and generating higher returns for shareholders, he said.

Ms. Barra began building the case for GM as a new-mobility pioneer in early 2016, sinking $500 million in ride-hailing company Lyft Inc. and purchasing Cruise Automation, a Silicon Valley startup focused on autonomous cars. The value of Lyft has doubled since then, and Cruise's staff has grown to about 350 from 40, with employees saying GM's ownership provides a smoother pathway to the mass production of robotaxis.

Cruise earlier this month acquired Strobe Inc., a company that makes low-cost "lidar," or the laser/radar technology that serves as an autonomous car's eyes and ears. These developments, combined with momentum on electric vehicles, have killed the suggestion that GM is "a dying dinosaur," Mr. Johnson said.

The pressure, however, isn't off Ms. Barra as she chases the lofty target of being the world's most valued automotive company. Joseph Spak, an RBC Capital Markets auto analyst, said investors need to question whether GM is adequately funding technology play that "may burn cash for a long time." And there is no clear strategy to make money on self-driving cars, electric vehicles and ride sharing.

The car business, meanwhile, faces headwinds, with GM poised to report a 33% decline in operating profit for the quarter ended Sept. 30. GM's North American production declined 25% during the third quarter, according to WardsAuto.com.

Lower output is due to slumping demand for GM's bread-and-butter family cars, luxury sedans and compact vehicles, as well as other production-related factors. Revenue is booked at the point of production, so slower factories likely hit GM's top line hard.

Adding further pressure is the company's increased reliance on sales incentives during the summer as it cleared excess inventory off dealer lots and spent heavily on disaster-relief programs in September.

Ms. Barra, however, is reducing GM's exposure to volatile markets at a time when many of her competitors are embracing them. GM closed the sale of its money-losing European business in August, shortly after exiting the Indian and Russian markets. More recently, it consolidated all of its remaining non-China international businesses into a single operation and shuttered production in Australia.

These moves could help GM maintain its record profit clip, even if volumes in China and the U.S. fall off all-time highs. The company forecasts 10% operating margins in its North America business, mirroring a profit haul typically enjoyed only by luxury brands or Toyota Motor Corp.

Ms. Barra's blueprint contrasts domestic counterparts. Analysts say her ability to create more daylight between GM and its rivals will further bolster the case for an outsized valuation.

Fiat Chrysler CEO Sergio Marchionne has been slow to embrace moonshot ideas and has instead focused on finding a partner capable of boosting the company's scale. Even though Ford is moving ahead in driverless cars and EVs under a new CEO, the No. 2 U.S. auto maker's progress is murky and the company's new cost-cutting efforts appear to be the central narrative. Both companies report earnings next week.

Tesla, reporting Nov. 1, has a well-publicized list of challenges, will post deep losses for the July through September period, according to analyst expectations. The company finished the latest quarter with $3 billion in cash and plans to spend $2 billion in the second half to make way for the Model 3.

Write to John D. Stoll at john.stoll@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
FIAT CHRYSLER AUTOMOBILES 0.26% 14.006 End-of-day quote.-6.30%
FORD MOTOR COMPANY 2.26% 8.83 Delayed Quote.-30.82%
GENERAL MOTORS CORPORATION 1.98% 32.42 Delayed Quote.-22.44%
TESLA -0.26% 257.91 Delayed Quote.-16.88%
share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on GENERAL MOTORS CORPORATION
05:25pGENERAL MOTORS : Around 100,000 Opel vehicles to be recalled in diesel probe - m..
RE
01:02pGENERAL MOTORS : GM Breaks New Ground with the Industry's First True, Optional E..
AQ
06:23aGENERAL MOTORS : GM Breaks New Ground with the Industry’s First True, Opti..
PU
10/12China's Auto Sales Face First Annual Decline in Decades -- Update
DJ
10/11EXCLUSIVE - REVERSE GEAR : China car dealers push for tax cut as auto growth sta..
RE
10/11Toyota, SoftBank in first-ever alliance, target self-driving car services
RE
10/10T. Rowe Price raises bet on Tesla in vote of confidence for Musk
RE
10/10GENERAL MOTORS : Report of unscheduled material events or corporate event
PU
10/10GENERAL MOTORS CO : Change in Directors or Principal Officers, Financial Stateme..
AQ
10/10GENERAL MOTORS : YourMechanic Expands Internationally, Builds out Fleet Manageme..
AQ
More news
News from SeekingAlpha
09:34aThe Hidden Bear Market 
10/12China auto sales plummet 
10/11My Oh My, Has Fixed Income Really Died? 
10/11INTERACTIVE BROKERS - EUROPE : The Week Ahead 
10/10Stop Comparing Tesla To Legacy Automakers - Tesla Is Far More Attractive 
Financials ($)
Sales 2018 146 B
EBIT 2018 9 849 M
Net income 2018 7 522 M
Finance 2018 5 178 M
Yield 2018 4,96%
P/E ratio 2018 5,70
P/E ratio 2019 5,48
EV / Sales 2018 0,27x
EV / Sales 2019 0,27x
Capitalization 44 852 M
Chart GENERAL MOTORS CORPORATION
Duration : Period :
General Motors Corporation Technical Analysis Chart | MarketScreener
Full-screen chart
Technical analysis trends GENERAL MOTORS CORPORATION
Short TermMid-TermLong Term
TrendsBearishBearishBearish
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 20
Average target price 44,5 $
Spread / Average Target 40%
EPS Revisions
Managers
NameTitle
Mary Teresa Barra Chairman & Chief Executive Officer
Daniel Ammann President
Dhivya Suryadevara Chief Financial Officer
Randall D. Mott Chief Information Officer & Senior Vice President
Patricia Fiorello Russo Independent Director
Sector and Competitors
1st jan.Capitalization (M$)
GENERAL MOTORS CORPORATION-22.44%45 586
TOYOTA MOTOR CORP-9.48%192 246
VOLKSWAGEN-15.79%80 305
DAIMLER-25.30%65 402
BAYERISCHE MOTOREN WERKE-14.21%55 986
HONDA MOTOR CO LTD-21.22%49 938