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Bull of the Day: General Motors (GM)

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Headquartered in Detroit, MI,General Motors (GM - Free Report)  is one of the largest automakers in the world with more than 180,000 employees and 12,450 dealers in 125 countries.

The automaker has three operating segments, General Motors North America (76.5% of total revenues in 2017), General Motors International Operations (15.1%) and GM Financial (8.3%).

GM has eight distinctive automotive brands under its corporate umbrella: Chevrolet, Buick, GMC, Cadillac, Holden, Baojun, Wuling, and Jiefang.

Strong Quarterly Results

GM reported Q4 2017 adjusted earnings of $1.65 per share, up 21.3% year-over-year and significantly ahead of the Zacks Consensus Estimate of $1.34.

Revenues also beat our estimate. Strong demand for pickup trucks and SUVs, particularly in North America boosted the results.

“Improvements in all operating segments and an intense focus on cost reductions generated a record quarter and another record year. We plan to build on this momentum in 2018 and beyond as we focus on growth opportunities across many parts of our business,” said the CFO.

Returning Cash to Shareholders

With strong performance in cash generation, the company returned $6.7 billion to shareholders in 2017. Since 2012, GM has returned more than $25 billion, which represents more than 90% of available free cash flow generated over that time.

GM’s current dividend yield is 4%, making the stock an excellent holding for income-focused investors.

Investing in the Future of Mobility

GM has made significant progress in advancing their vision for the future of mobility.  They are planning to introduce at least 20 new all-electric models by 2023.

The company also has plans to invest $100 million to upgrade two plants in Michigan, which will manufacture its autonomous model Cruise AV, expected to be launched in 2019.

The Bottom-Line

In addition to an improving outlook and a juicy dividend yield, the stock looks attractive on valuation front as well. It is currently trading at 6.08 times 12-month forward earnings. The stock has Zacks Style Score of “A” for Value, Growth and VGM and the Sector Rank is in the top 19%.

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>
 




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