It has been a tough road back for General Motors (GM) following its massive bankruptcy and subsequent reorganization and IPO. The company has made some gains though—even if it isn’t shown up in its stock price—as GM is now free of U.S. ownership, helping to finally shed the moniker of ‘Government Motors’.
However, thanks to some quality control issues, faulty ignition switch problems looked to derail the company’s growth story. This looked to be a huge problem for GM, but recent rulings have suggested that GM will be shielded from these claims thanks to its bankruptcy. So now, finally, investors in GM can focus on the fundamentals of the stock and its future, as opposed to the problems of its past.
GM’s future
Thanks to a solid car sales market and a rebounding economy, GM is starting to pick back up. The near term future appears rosy as well, at least if you look to recent analyst estimate revisions as we have seen far more estimates move higher than lower in the past two months.
In fact, estimates are seeing near universal movement upwards, pushing the full year consensus from $4.41/share 90 days ago to $4.66/share today. We have also seen a similar trend for the next year period with the consensus going from $4.75/share to $5.14/share today.
These revisions also bake in pretty impressive growth rates for GM including 52% EPS growth this year (year-over-year), along with 10% growth in the following year period. Clearly, GM is finally starting to find its grove once again, and with a recent boost to dividends (up to 36 cents per quarter) it is clear that the stock is on the right track.
Key Fundamentals
For the reasons outlined above, we have assigned GM a Zacks Rank #1 (Strong Buy) and are looking for more outperformance from the stock in the near term. But just as impressive for those considering a GM investment is the stock’s Style Scores as the company has an ‘A’ in growth, value, and momentum.
There are plenty of highlights in this regard and investors can see them all in the style scorecard section of the GM quote page. But some worth pointing out right off the bat include projected EPS growth which is roughly five times better than the industry, a Price/Sales ratio that is nearly half that of the industry at large, and then strong stock price momentum as well, suggesting that GM is truly a well-rounded stock.
Bottom Line
Yes, GM has had some significant problems in the past, but it appears to be shaking many of these issues off now. The company is seeing strong earnings growth, and analysts are becoming increasingly bullish about the stock.
Plus, with incredible growth, value, and momentum numbers, this stock is going to be tough to beat from any fundamental perspective. So if you are looking for a top automotive stock for your portfolio right now, definitely make sure to give GM a closer look.
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GENERAL MOTORS (GM): Free Stock Analysis Report
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