Morningstar Rating

Stock Research and Analysis

by David Whiston, CFA, CPA, CFE

Bulls Say

GMNA's break-even point of about 10.5 million-11 million units is drastically lower than it was under the old GM. The company's earnings should grow rapidly as U.S. vehicle sales bounce back from the 2009 low.
GM's U.S. hourly labor cost is about $5 billion compared with about $16 billion in 2005 under the old GM.
GM can charge thousands of dollars more per vehicle in certain segments. Higher prices with fewer incentive dollars allow GM to get more margin per vehicle, which helps mitigate a severe decline in light-vehicle sales and falling market share. Read more 

Bears Say

The cadence of a recovery in global vehicle demand is very uncertain, especially in Europe.
Auto stocks are often sold off severely because of macroeconomic concerns--even if the bottom-up story looks attractive.
The U.S. auto market is becoming more crowded each year. Hyundai and Volkswagen are likely to take more share over time from existing players such as GM. Read more 

Management

GM's capital allocation history is short but already mixed. Return on invested capital had been below the weighted average cost of capital until 2012, but we expect healthy economic profit during our forecast period. The concern we--and a lot of investors--have   Read more 

Profile

General Motors Company emerged from the bankruptcy of General Motors Corporation (old GM) in July 2009. GM has 11 brands and operates under five segments: GM North America,  Read more 

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