Automaker General Motors Co. (GM) has recently reached an agreement with Navistar International Corp. (NAV) to expand its Chevrolet commercial truck portfolio.
Last quarter results
The company has been continuing to generate and deliver strong financial results, and the third quarter shows the company has the power to make earnings. It expects its earnings to accelerate in the next several years, with double-digit EPS growth.
This quarter was a record for EBIT and EBIT-adjusted margin, as EBIT increased by 34% compared to the same quarter of 2014, and EBIT-adjusted margin was up to 8% compared to 5.8% in the same period of last quarter.
During the third quarter, General Motors Financial increased its presence at GM dealers in North America, and GM retail sales units nearly tripled from 11% to 32% year over year.
GM also reduced its debt from $9.4 billion to $9.1 billion, and the company ended the quarter with very strong total automotive liquidity of $34 billion, and automotive cash and marketable securities of $21.9 billion.
GM returned approximately $4.6 billion to shareholders through share repurchases of more than $2.9 billion and dividends of more than $1.6 billion.
These strong results show that GM continues to be a very valuable investment as it improved its balance sheet, accelerated earnings potential and is focusing on producing highly profitable vehicles in its two critical markets, the U.S. and China.
Outlook
Investors can be optimistic as GM’s total earnings for the full year will be equal to last year's performance. Earnings are expected to grow with double-digit EPS as GM continues to increase its sales penetration.
Competitors
Based on the market cap, the main competitors of General Motor are Ford Motor Co. (F), which is trading with P/E ratio of 11.85 and Volkswagen AG (VLKAY) with a PE of 11.54. GM’s P/E ratio is 13.07.
Toyota Motor Corp. (TM) has a high market cap, about triple the size of GM’s market cap, but Toyota’s P/E ratio is lower at 10.43.
General Motors earnings have grown 77.30% over the one-year period, while Toyota Motor’s EPS has grown just 18.60%. Ford's growth has declined 21.70%, while Volkswagen has dropped 43.30%.
Guru trades
During the third quarter, several gurus reduced their stakes in GM. Third Avenue Management (Trades, Portfolio) trimmed its holding by 3.19% and Richard Snow (Trades, Portfolio) trimmed his by 4.16%. The other three gurus reduced stake below 1%. GM is a new position in the portfolio of John Buckingham (Trades, Portfolio), while Ronald Muhlenkamp (Trades, Portfolio) sold out his stake in GM.
Two investors added to their stakes during the quarter:Â Arnold Van Den Berg (Trades, Portfolio) by 101.43% and Ken Fisher (Trades, Portfolio) by 105.38%.
Warren Buffett is the main guru shareholder with a stake of 3.21% of outstanding shares that is 1.18% of the total assets he manages. Second is David Einhorn (Trades, Portfolio) with a 1.05% stake that accounts for 8.11% of his portfolio, followed by HOTCHKIS & WILEY with a 0.97% stake.
