In this article, let´s consider General Motors Company (GM), a $49.36 billion market cap that is the world's second-largest producer of cars and trucks. It has a trailing P/E ratio that indicates that the stock is relatively overvalued (PE 50.9x vs Industry Median 15.8x).
The company maintains quality and has one of the best designs. Not only cars, it is also a leader in truck models, too. We think that, in the near future when vehicle demand recovers, the firm will be in an excellent position to grow its earnings. Further, the company focuses on four brands instead of eight, making marketing efforts more concentrated and efficient. Efficiency is reflected also in pricing policies, where it developed a pricing model searching for profitability. This means that is operating a demand-pull model where it produces only to meet demand. Continue Reading »