Morningstar

GM: Great Quarter, Undervalued Shares

The auto giant’s upbeat quarterly report shows that the firm is starting to take advantage of its scale, writes Morningstar’s Dave Whiston.

Securities In This Article
General Motors Co
(GM)

GM North America had excellent results with adjusted EBIT margin increasing 230 basis points from the prior year’s quarter to a quarterly record 11.8%. This quarter marked the ninth consecutive year-over-year increase for GMNA margins with higher wholesales from midsize trucks and the new Chevrolet Trax small crossover driving margin improvement. Carryover pricing headwinds mostly offset about $400 million of favorable materials and logistics cost variances. We are especially encouraged to see management amend its 2015 GMNA margin guidance to be 10% from over 9% previously. It is very significant as well because 10% margin in GMNA had not been guided to happen until 2016 so management expects to meet its goal a full year early. We have long said that we found the 2016 GMNA margin guidance as conservative, so we remain very optimistic about the segment’s potential next year as GM introduces more new product to the market.

Morningstar Premium Members gain exclusive access to our full GM report, including fair value estimates, consider buying/selling prices, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

More in Stocks

New 4-Star Stocks

DraftKings and Light & Wonder are among the stocks that fell into undervalued territory.
Bella Albrecht

3 Dividend Stocks for October 2024

These three dividend payers have an average yield of more than 4.5%.
David Harrell

Consumer Defensives: Despite Angst, Thirsty Investors Have Names to Pursue

Estee Lauder, Kraft Heinz, and Dollar General are our top consumer defensive stocks.
Erin Lash, CFA

About the Author

David Whiston, CFA, CPA, CFE

Strategist
More from Author

David Whiston, CFA, CPA, CFE, is a strategist, AM Industrials, for Morningstar*. He covers stocks in the automotive industry, including dealerships, parts manufacturers, and automakers. He has covered the automotive industry since joining Morningstar in 2007. He writes stock reports, ad hoc reports, stock analyst notes, and builds discounted cash flow models for each company covered. He also assesses their economic moat and makes frequent television and print media appearances in local, national, and international news outlets. Key stocks covered include GM, Ford, CarMax, and all six publicly traded franchise auto dealers, such as AutoNation and Penske Automotive Group.

Before joining Morningstar in 2007, Whiston spent four years in PricewaterhouseCoopers’ New York real estate audit practice and one year in its Chicago office working on real estate acquisition due diligence, gaining experience around assessing an asset’s cash flow.

Whiston holds a bachelor’s degree in business administration with a concentration in accounting from the University of Richmond’s Robins School of Business. He also holds a master’s degree in business administration with concentrations in finance, economics, and organizational behavior from the University of Chicago Booth School of Business. He holds the Chartered Financial Analyst® designation, and he is a Certified Public Accountant and a Certified Fraud Examiner.

In 2012, he ranked first in the specialty retailers and services industry in The Wall Street Journal’s annual “Best on the Street” analysts survey. He ranked first in the same industry in 2011 .

* Morningstar Research Services LLC (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

Sponsor Center