2024-07-05 01:26:48 ET
Summary
- General Motors' market share is expected to shrink due to the rise of pure-play EVs automakers.
- Despite the shrinking market share, GM is expected to deliver solid returns to shareholders due to good profitability and working capital management.
- The Company's risk-reward profile indicates a potential 5.6% alpha, making it a good investment opportunity.
Executive Summary
General Motors ( GM ) stocks are currently trading below their fair market price.
We expect GM to shrink its market share in the foreseeable future.
However, thanks to the good profitability, and excellent management of working capital, which led the firm to reduce reinvestment needs and increase free cash flow above the industry average, we expect GM to continue to deliver solid returns to its shareholders in the coming years, despite the lack of growth.
At current prices, our assumptions suggest that GM’s risk-reward profile has the potential to generate a positive excess return (alpha 5.6%)....
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General Motors: Market Share Is Decreasing But Cash Flow Generation Remains Highly Positive