Core Viewpoint - General Motors (GM) is currently undervalued despite strong financial performance, presenting an attractive investment opportunity with a forward sales multiple of 0.27 and a Value Score of A [1][3]. Financial Performance - GM's full-year 2024 revenues increased by 9% to approximately $187 billion, with adjusted EBIT reaching a record $14.9 billion [3]. - Annual earnings surged by 38% to a record $10.60 per share, indicating strong profitability [3]. - The forward P/E ratio stands at 4.22, which is lower than both the industry average and GM's five-year average, suggesting undervaluation [3]. Stock Performance - After a 45% increase last year, GM's stock has decreased by 8% year-to-date due to economic uncertainties and tariff concerns, although it remains better positioned than the broader auto sector [4]. Market Position - GM is the top-selling automaker in the U.S., with a market share increase of 30 basis points to 16.5% in 2024, driven by strong demand for its pickups and SUVs [7]. - The company sold 114,000 electric vehicles (EVs) in 2024, marking a 50% year-over-year increase, and aims to manufacture 300,000 EVs this year [8]. Strategic Initiatives - GM's restructuring efforts in China are yielding positive results, with a 40% sequential increase in deliveries and positive equity income reported in Q4 2024, excluding restructuring costs [9]. - The company achieved its $2 billion net fixed cost reduction target by the end of 2024 and expects $1 billion in annualized savings from refining its autonomous strategy [10]. Liquidity and Shareholder Returns - GM generated $14 billion in adjusted auto free cash flow in 2024 and returned $7.6 billion to shareholders through dividends and buybacks [11]. - The company has a solid liquidity position with $35.5 billion available, including $21.7 billion in cash, and announced a 25% dividend hike [11]. Tariff Preparedness - GM is the largest U.S. automaker importing from Mexico, with 750,000 vehicles shipped in 2024, and has proactively reduced international inventory by 30% to mitigate tariff impacts [12]. Investment Outlook - Analysts suggest that GM is a solid investment choice, with projected EPS growth of 9% and 4% for 2025 and 2026, respectively, and a Wall Street average target price of $59.92 indicating a potential upside of over 22% [14].
GM Trading at a Deep Discount: 6 Reasons to Buy the Stock Now