General Motors Has Been Downgraded by Goldman Sachs Causing a Drop in Price

General Motors is a leading name in the auto industry and today was downgraded by Goldman Sachs from a neutral to a sell. This is due to cylical pressures and potential issues with North American product changeover, as cited by Goldman. Purchasing vehicles is a very cyclical item because people are only making big ticket purchases if they are financial stable and they have job security.

Published over a year ago
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Reviewed by Vlad Skutelnik

David Tamberrino stated that the issues with General Motors could bring 2018E EBIT adjusted down over 20%, which is a large change. The stock has since taken a dip and that is to be expected. Looking at the market, it has been in a bull market for quite some time and may be due for a pull back. Automotive is one of the most cylical sectors in the market and once the market slows, will be effected quickly.

Typically, a company's financial statements are the reports that show the financial position of the company. There are three main documents that fall into the category of financial statements. These documents include GM income statement, its balance sheet, and the statement of cash flows. Potential GM investors and stakeholders use financial statements to determine how well the company is positioned to perform in the future. Although GM investors may use each financial statement separately, they are all related. The changes in GM's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on GM's income statement, which results in the company's gains or losses. Cash flows can provide more information regarding cash listed on a balance sheet, but not equivalent to net income shown on the income statement. Please read more on our technical analysis and fundamental analysis pages.
The goal of GM fundamental analysis is to do accurate financial forecasts. There are several possible objectives to fundamental analysis, such as projecting of GM performance into the future periods or doing a reasonable stock valuation. The intrinsic value of GM shares is the value that is considered the true value of the share. If the intrinsic value of GM is higher than its market price, buying is generally recommended. If it is equal to the market price, it is recommended to hold; and if it is less than the market price, then one should sell all shares GM. Please read more on our fundamental analysis page.

How effective is GM in utilizing its assets?

General Motors reports assets on its Balance Sheet. It represents the amount of GM resources that either has an existing economic value or will provide some form of benefits in the future. By effectively utilizing its assets, GM aims to generate revenue, control costs, drive operational efficiency, and enhance profitability. Optimizing asset utilization helps maximize shareholder value and maintain a competitive position in the Automobile Manufacturers space. To get a better handle on how balance sheet or income statements item affect GM volatility, please check the breakdown of all its fundamentals.

Are GM Earnings Expected to grow?

The future earnings power of GM involves the interaction of many company-specific, industry, and economic forces. Earnings estimates embody investors' opinions of GM factors such as sales growth, product demand, competitive industry environment, profit margins, and cost controls. GM stock prices adjust as these expectations change or are proven wrong. The main thing to remember is that equities with high expected earnings growth tend to underperform the market because it is usually difficult to meet the market's high expectations. Companies with low earnings expectations tend to do better than expected. Please use our latest analysis of GM expected earnings.

And What about dividends?

A dividend is the distribution of a portion of GM earnings, decided and managed by the company's board of directors and paid to a class of its shareholders. Note, announcements of dividend payouts are generally accompanied by a proportional increase or decrease in a company's stock price. GM dividend payments follow a chronological order of events, and the associated dates are important to determine the shareholders who qualify for receiving the dividend payment. GM one year expected dividend income is about USD0.25 per share.
As of the 18th of April 2024, Dividends Paid is likely to grow to about (567.1 M). In addition to that, Dividend Yield is likely to drop to 0.01.
Last ReportedProjected for Next Year
Dividends Paid-597 M-567.1 M
Dividend Yield 0.01  0.01 
Dividend Payout Ratio 0.06  0.06 
Dividend Paid And Capex Coverage Ratio(0.87)(0.92)
Investing in dividend-paying stocks, such as General Motors is one of the few strategies that are good for long-term investment. Ex-dividend dates are significant because investors in GM must own a stock before its ex-dividend date to receive its next dividend.
This type of analysis is very useful when you want to generate a past dividend schedule and payout information for GM. Then that information in the form of graph and calendar can be used to fully explain how Du Pont dividends can provide a real clue to its valuation.

GM Gross Profit

GM Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing GM previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show GM Gross Profit growth over the last 10 years. Please check GM's gross profit and other fundamental indicators for more details.

Breaking it down

With that being said, if you are invested in the market are looking to invest, there are many different companies that operate in this market. The first name is Ford, which seems to be doing well off the lows of the year. When looking at the health of a company, you want to ensure the company has minimal market fear and their projection and sales continue to grow. If you are not looking for an individual company, you can look into the ETF world to find a sector product of dig deeper and look at part manufactures.  

According to Kelley Blue Book, they are forecasting new care sales to fall roughly 2% in October, which would not boast well for GM. The market may be speaking and that could be the sign to begin looking at alternatives to this space. Portfolio rebalancing is key and should be done on an annual basis.  

When researching GM, be sure to look at other analysts as well. Goldman Sachs may not be the best opinion due to various reasons. It is important to look at all resources out there and formulate your own opinion. General Motors seems to be sticking around but knowing what the company is expecting in the future is key. When in doubt, just avoid the market because it is important to understand the markets you are investing in. Look at competitors and alternative investments if you are uncomfortable. Reading the quarterly and annual reports is a great way to being your research.

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Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Nathan Young do not own shares of General Motors. Please refer to our Terms of Use for any information regarding our disclosure principles.

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