The spark of U.S. legacy automaker General Motors (GM) continues to illuminate the financial cosmos, with each trading day driving its stock price closer to the sun, hovering at a tantalizing $49/share, gleaming brightly at $49.78 as the last bell chimed on Friday. The value trove teeters on the precipice of its 52-week peak of $50.50, adding a mesmerizing aura to its already illustrious tapestry.
In the intricate tapestry of the automotive realm, General Motors stands tall as a behemoth, boasting a market capitalization that towers over $55 billion. As the maestro orchestrating 16.2% of the U.S. auto market landscape in 2023, GM’s symphony of success harmonizes the resonance between robustly profitable internal combustion engine (“ICE”) pickups and SUVs, and its visionary foray into the realm of eco-friendly vehicles.
In the symphony of a future intertwined with electric and autonomous mobility, General Motors emerges as a crescendo that strikes the perfect note, a cog spinning in synchrony with the wheel of change, all while offering a tantalizingly discounted ticket to investors. The stock’s meteoric ascent of over 38% year-to-date sings a sweet melody, outshining the industry, sector, and the illustrious S&P 500. Even its closest peer, Ford, surrenders to the brilliance of GM’s stock performance.
The Ongoing Symphony of GM’s Stock Performance
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Discovering the Understated Value of GM Stock
General Motors has mastered the art of exceeding profit expectations, dancing above projections in each of the preceding four quarters, with an average earnings surprise harking at an impressive 18.8% encore. As the curtains rise on the future acts of 2024 and 2025, the stock relishes in an encore of ascending estimate revisions.
Image Source: Zacks Investment Research
With the graph of earnings estimates scaling the heights, General Motors’ price-to-earnings silhouette strikes a mesmerizing pose at a mere 4.98 times forward earnings, flaunting a significant discount against the industry’s average of 33.93. Furthermore, the stock’s current tango at a ground-breaking 60% below its 5-year peak and a 15.7% markdown to the median paints a portrait of irresistible value. Nestled amidst the trading near yearly crescendos, GM’s stock whispers a sweet serenade of investment allure, currently adorned with a Value Score of A.
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General Motors’ financial waltz radiates a bewitching glow, with the company elevating its dance of adjusted automotive FCF guidance to a charming band of $9.5-$11.5 billion, soaring above the previous forecast’s symphony of $8.5-$10.5 billion. As the stock pirouettes through the realm of price-to-cash flow, its stance exudes strength and solidity, resonating with investors seeking reliability and stability. At a mesmerizing 2.95, General Motors’ P/CF echoes a tantalizing melody well below the industry’s established 5-year chord of 19.23.
Vanquishing Doubt: 5 Reasons We Back General Motors
Cost-Containment Alchemy: General Motors conducts a grand symphony en route to achieving a $2 billion net cost reduction by 2024, a ritualistic dance that echoes austerity and efficiency. In the grand performance of 2023, the company masterfully sliced $1.4 billion in fixed costs, offset by a $400 million crescendo in higher depreciation and amortization, culminating in a net reduction sonnet of $1 billion. The encore promises a continued tale of reduction by another $1 billion this year.
GMNA’s Ferocity: General Motors elevates its market share dominion, reigning over the United States arena with a regal 16.6% crown in the second quarter of 2024, a splendid ascent of 1.2 percentage points sequentially. GM’s North American sales saga transcends the pandemic slumber, marking a triumphant return to pre-pandemic levels after a four-year hiatus. Operating margins strike a crescendo, fueled by the harmonious optimization of production processes. Propelled by the resounding ovation for the first half of 2024, GMNA’s narrative of market prowess and cost-lightened strides echoes a bullish forecast, as the company raises its 2024 sonnet to adjusted EBIT notes of $13-$15 billion, up from $12.5-$14.5 billion. The crescendo of adjusted EPS hits a resounding crescendo marked in the symphony at $9.5-$10.5, soaring above $9-$10.
Advancing on the Electric Highway: The mythic fears surrounding Tesla and other EV giants are dispelled as General Motors boldly sprints towards an electrified horizon. While the realm of EV quivers with near-term trials, GM strides forth with its electrifying strategy, a saga spun from reducing battery costs, unveiling new models, and escalating production endeavors. Cradling dreams of variable profitability in its EV tabernacle by the fourth quarter of 2024, GM ushers in the Ultium Drive saga and storytelling from the battery sanctums of Ohio, Tennessee, and Lansing. Models like the Hummer EV, Chevy Silverado EV, and Cadillac Lyriq adorn the market’s stage, as GM’s delivery of 22,000 electric steeds in the symphonic second quarter crescendos a triumphant 40% year-over-year serenade. The forthcoming models poised for arrival later in the year whisper tales of greater glory, igniting GM’s long-term prospects with a captivating aura.
Cruise into the Future: GM’s autonomous ensemble, Cruise, emerges from the shadowed vale of setbacks and trials, poised for a resplendent dawn. Cruise conducts its orchestral overture, preparing to resume fully autonomous rides come the crescendo of the year, with a tantalizing promise of fare collection by early 2025. A star-studded development adorning its saga is the multiyear narrative twined with Uber Technologies, set to unravel in 2025, where Uber’s profound platform shall welcome Cruise’s robotaxi marvels. This duet promises a vibrant crescendo that can unfurl the sails of Cruise’s robotaxi odyssey, unlocking a symphony of bountiful opportunities.
Financial Vigor & the Share Buyback Sonata: Nestled amidst the tumultuous tides, General Motors stands as an impregnable bastion, safeguarded by a vault brimming with $35.8 billion in automotive liquidity as of June 30, wherein $22.5 billion nestles in gold and silken cash equivalents. The firm’s buyback dance, a spirited $10 billion gala set to conclude in the symphony of the fourth quarter of 2024, entwined with an additional $6 billion sanctioned in June, resonates with confidence in future reels of solvency and performance.
Embarking on the Journey to the Pinnacle with GM Stock
As the musical notes of the stock market reverberate with symphonic potential, the Zacks’ melody sings of an average price target for GM stock at a harmonious $55.74 per share, an enticing crescendo inviting investors to tread the rhythmic path of a 12% potential rise from current standings. If General Motors orchestrates the symphony of its EV tapestry with dexterity while upholding the robust fortitude of its profitable ICE empire, investors could sway to the melodic strains of considerable gains.
The ensemble of GM’s stock, though poised near the zenith of its 52-week range, gleams with an ethereal allure beckoning opportunistic souls to its embrace. Nestled within its core lie strong fundamentals, an enchantingly attractive valuation, and a symphony of positive estimate refrains. Draped in the Zacks’ 2024 vision, a 4% rise in sales and a 29% crescendo in EPS hint at a tale of imminent growth and bountiful horizons.
GM stock, adorned with a Zacks Rank #2 (Buy) and boasting a VGM Score of A, beckons the wary traveler to witness the saga unfold.
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