A must-know investor's guide to General Motors Company (GM)

A must-know investor's guide to General Motors Company (GM) (Part 1 of 11)

A must-know investor’s guide to General Motors Company (GM)

General motors

General Motors Company (GM) designs, builds, and sells automobiles worldwide. It’s the largest U.S.-based automobile manufacturer and the second largest automobile manufacturer globally. GM traces its roots to the late 1800s. GM grew in the following century, pioneering market segmentation in the emerging consumer economy by supplying vehicles for several market segments. By the 2000s, the brands overlapped, the organization was overgrown, and pension obligations were beyond the company’s ability to fulfill.

GM SPY ChartEnlarge Graph

GM took a trip through bankruptcy court during the downturn, emerging from bankruptcy on July 10, 2009. The U.S. government provided liquidity to the predecessor company and received shares in the new GM. The U.S. government sold the last shares of GM in December 2013.

While in bankruptcy, GM reduced its number of brands and cut costs through union concessions and pruning operations globally. The restructuring continues as GM strives to add manufacturing capacity to higher-growth areas and optimize manufacturing in lower-growth areas.

In the chart above, GM’s share price ranged from $20 to $40 per share over the past three years. GM underperformed the S&P index (SPX), as investors had to consider GM’s volatile earnings, underfunded pension, restructuring charges, product recalls, and product liability. We’ll take a look at these issues and give you a framework to approach this complex investing opportunity.

First, we’ll look at GM’s strategy and then dig into its revenue and earnings to see how GM compares to other industry players. Next, we’ll look at the company’s financing structure. Then we’ll turn to the equity market to see how GM is being valued against its competitors. We’ll provide a look at the risks and opportunities for GM. This series is an overview of GM and where it stacks up against its competitors, including Ford Motor Company (F), Toyota Motor Corporation (TM), BMW Group (BMW), and Volkswagen (VOW). An investor could also gain industry exposure through the ETF CARZ.

The Realist Discussions

  • Czechster

    What is a pension? Oh I know Rick Perry and his buddies will draw a large six figure pension but how many are covered in the private sector? I didn’t know GM was part of the government.

  • George G..

    I really do not think GM has. Fix for the so called switch problem. Their vehicles have the key so low on the steering wheel that one can shut down the car by bumping the remote with their knee. So far none of fixes I know of address that problem It’s virtually Unfixable unless the whole steering colum be replaced. That cost would be enormous