GM - Embedded Expectations Analysis - 2018 09 14
General Motors Company (GM:USA) currently trades near historical averages relative to UAFRS-based (Uniform) Earnings, with a 16.5x Uniform P/E, implying muted expectations for the firm. Meanwhile, management has concerns about their Cruise technology, foreign currency headwinds, and new K2 truckSpecifically, management is confident that foreign exchange rates have been more detrimental than expected, and that truck segment underperformance is expected as they prepare to launch their new K2 truck. They may also be concerned about continued challenges in foreign markets, particularly in South America. Moreover, they may lack confidence in the sustainability of equity income in China, and in the potential of 10 newly-introduced models in their Chinese markets. Additionally, they may lack confidence in their ability to improve fuel economy and reduce emissions by working toward an all-electric future. Furthermore, they may lack confidence in their Cruise technology, particularly their ability to deploy it safely and the additional investment needed. They may also be concerned about changes from NAFTA, and may lack confidence in the immediate results of K2 in H2 2018. Finally, they may lack confidence in the sustainability of strong execution and favorable pricing conditions
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