Is General Motors Company (GM) Its Own Worst Enemy?


General Motors Company (NYSE:GM) is a profitable company, but it fails to garner attention and market respect as enjoyed by Tesla. Analysts believe the difference is because Tesla’s CEO Elon Musk leads the way and has massive interests in Tesla future as he is the biggest shareholder. Analysts think that General Motors biggest problem stems from its management. The company’s management isn’t proactive. It also didn’t benefit from a dual-share plan offered by billionaire David Einhorn’s Greenlight Capital.

Morgan Stanley’s Adam Jonas recently said in a report that GM could easily reach $50 a share, only if the management could take the necessary steps to unlock shareholder value. Jonas said in a report that the company should separate its auto tech portfolio and reposition Cadillac to counter Tesla. The analyst has a price target of $40 for GM.

General Motors Company (NYSE:GM) is trading at a big discount. Its PE ratio is the lowest in S&P 500. The stock has gained about 11.6% so far this year. The Company is price at just 6.8 times expected 2017 earnings and 0.33 times annual sales.

General Motors sales are coming back. In August, the company reported that it sold 275,552 units, a 7% increase, versus a 2% increase forecasted by Edmunds. General Motors Company (NYSE:GM) ended the month with an 88 days supply, compared to 104 days at the end of July.

Good news for General Motors is coming from China. In August, GM sales rose by a whopping 12% in China to reach 328,425 vehicles. Cadillac sales in China increased by 51% year over year in August. Cadillac is getting a lot of popularity in the country, an excellent trend for GM as Cadillac is expensive, and its sales add much more to the company’s bottom line than smaller cars.

General Motors Company (NYSE:GM) dividend yield stands at 3.9%, which is nearly double the yield of the S&P 500.

Legendary investor Warren Buffett is a major shareholder in GM with an ownership of about 60 million shares. The stock is also owned by famous investors like David Einhorn (Greenlight Capital owns over 54.7 million shares of the company as of the end of June), David Tepper of Appaloosa Management and value investor Mohnish Pabrai.

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