Still, Wall Street doesn't seem to be impressed with GM numbers, as a rally in the company's shares following the release of its financial results was tamed by the end of the trading day.
't In fact Wall Street hasn't been enthusiastic about GM’s stock in recent years.That's in spite of the company's hefty dividend, and improving financials—see tables.
GM’s Financials as of 6/18/2016
Company |
Current Price |
Forward PE |
Dividend yield |
Operating Margins |
Qtrly Revenue Growth (yoy) |
GM (NYSE:GM) |
32.03 |
5.36 |
4.90 |
5.21 |
4.3 |
Ford |
$13.44 |
6.36 |
4.44% |
6.29% |
11.30% |
Source: Finance.yahoo.com
GM’s Financials as of 2/4/2015
Company |
Current Price |
Forward PE |
Dividend yield |
Operating Margins |
Qtrly Revenue Growth (yoy) |
GM |
35.95 |
8.21 |
3.7 |
1.17 |
0.70 |
Ford |
$15.99 |
8.47 |
4.10% |
4.36% |
-3.10% |
Source: finance.yahoo.com
Most notably, GM’s stock failed to catch up with the rest of the overall market, which has been hitting new all time highs—see table.
Stock/Index |
Thursday’s Performance |
Five-year performance |
GM |
1.62% |
15.72% |
S&P500 |
-0.35 |
67.55 |
What's going on? Why are investors staying away from GM's stock?
The first thing that comes to mind is concern over the state of the global economy and the prospect of higher interest rates down the road – which could hurt cyclical sectors like the automobile industry.
Then there's the problem with “pent down demand” — the pushing of future sales forward — which has created a market saturation in the automobile market, as I discussed in a previous price here.
But there’s another more fundamental reason, in our opinion.
Investors are reluctant to partner with United Auto Workers (UAW), a major stakeholder in GM corporation.
There’s a simple reason for that. GM is running the risk of turning into a welfare agency run for the benefit of its management and unionized labor, rather than for stockholders -- like the old GM.
And we all know what happened to the old GM.
