GM - Embedded Expectations Analysis - 2021 05 04
General Motors Company (GM:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 17.6x Uniform P/E. At these levels, the market is pricing in expectations for profitability to remain stable, but management may be concerned about their liquidity position, combustion engine investments, and Super Cruise launchSpecifically, management may lack confidence in their ability to execute their capital allocation strategy, sustain their automotive liquidity position, and further realize significant cost savings. Moreover, they may have concerns about the sustainability of low interest rates, continued competitive pricing headwinds in China, and the launch of Super Cruise. Furthermore, management may lack confidence in their ability to expand Super Cruise's reach, sustain share gains in the US SUV market, and invest in internal combustion engine (ICE) vehicles. Finally, they may be exaggerating their leadership position in automotive technological advancement and they may lack confidence in their ability to meet their automotive free cash flow guidance
General Motors designs, builds and sells trucks, crossovers, cars and automobile parts. The company also provides automotive financing services through its subsidiary, General Motors Financial Company, Inc. (GM Financial). GM Financial provides retail loan and lease lending across the credit spectrum. GM Financial provides commercial lending products to dealers including new and used vehicle inventory floorplan financing and dealer loans, which are loans to finance improvements to dealership facilities, to provide working capital, and to purchase and/or finance dealership real estate. Other commercial lending products include financing for parts and accessories, dealer fleets and storage centers.
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