Core Viewpoint - General Motors (GM) announced a 25% increase in dividends and a $6 billion share buyback program, which positively impacted its stock price, rising 3.75% [1][2] Dividend and Buyback Details - The new dividend will be 15 cents per share, up from 12 cents, effective with the next payout in April 2025, aligning GM with Ford [3] - The $6 billion buyback plan includes a $2 billion accelerated share repurchase (ASR) to be completed by Q2 2025, leaving $4.3 billion for future buybacks [3] Financial Performance - GM generated $14 billion in adjusted auto free cash flow last year and returned nearly $7.6 billion to shareholders through dividends and buybacks [4] - The company reduced outstanding shares below 1 billion, closing 2024 with 995 million shares, and has $35.5 billion in total automotive liquidity, including $21.7 billion in cash [4] Tariff Preparedness - GM is the largest U.S. automaker importing from Mexico, with around 750,000 vehicles shipped from Mexico and Canada in 2024 [5] - The company has proactively cut international inventory by over 30% to mitigate risks associated with the impending 25% tariff on imports from Mexico and Canada [5][6] - GM's CFO stated that the company has been preparing for tariff impacts since November and has strategies in place to adjust to the changing trade environment [5][6] Market Position and Outlook - GM maintained its position as the top-selling automaker in the U.S. in 2024, with a market share increase of 30 basis points to 16.5% [8] - The company achieved its $2 billion net-fixed cost-reduction goal, enhancing profitability and raising its 2025 earnings outlook to $11-$12 per share, up from $10.60 in 2024 [8][9] Electric Vehicle (EV) Performance - GM's U.S. EV sales reached 114,000 units in 2024, a 50% increase from 2023, with the EV portfolio becoming profitable at the variable level in Q4 2024 [10] - The company expects EV losses to shrink by $2 billion this year due to improved production scaling and lower material costs [10] China Market Restructuring - GM's restructuring efforts in China are yielding positive results, with a 40% sequential increase in deliveries in Q4 2024, aiming for profitability in its China business this year [11] Valuation and Analyst Sentiment - GM stock is considered undervalued, trading at a forward price-to-earnings ratio of 4.21, significantly lower than industry peers [12] - Analysts have a bullish outlook on GM, with an average price target of $58.09, indicating approximately 20% upside potential [15]
GM's Investor Moves Impress but is it a Buy Amid Tariff Risks?