GM Today Is a Better Business Than Ever
In the 18 months since the spotlight was written, I’ve come to LOVE $General Motors(GM)$ ’s core business and how management is running it. Today’s Q3 2024 results show exactly why.
Revenue was up 10.5% to $48.8 billion!
Adjusted automotive free cash flow was $5.8 billion!
Full-year earnings guidance was increased by $0.50 to $10.00 to $10.50 per share in earnings.
This is in a DOWN market for the auto business.
But let’s put the company’s competitive position into some context:
GM has a 64% market share in large SUVS — THIS IS WHERE THE MONEY IS MADE IN THE AUTO BUSINESS!
GM has a 44% market share in full-size trucks.
GM’s EV market share in the U.S. has gone from 6.5% to 9.8% in JUST 1 QUARTERS!
In my GM earnings preview, I said:
I want to see that GM’s rhetoric about holding steady on prices (and ultimately margins) is holding true as competitors discount vehicles.
GM is holding the line on price AND gaining market share.
I can’t remember a time GM has been in such a strong position. And EVs are just starting to roll off the line. If EVs add a new kind of consumer (skewing more coastal and toward smaller vehicles), GM could gain even more share without giving up its profit center in trucks and SUVs.
On top of that, buybacks continue!
This chart doesn’t have Q3 data yet, but management said the share count ended at 1.12 billion, and another 25 million shares will be bought back in October as part of the 2023 Accelerated Share Repurchase Program.
By early next year, management expects to reduce the share count to under 1 billion shares outstanding.
A Strong Foundation and Future Optionality
Sometimes, results shock you as an investor. That’s what I saw from GM today.
The company is performing extremely well in trucks and SUVs, is introducing compelling lower-price vehicles, and is growing in EVs. Management is also under-promising and over-delivering, which is a great trait in leadership.
On top of that, next-generation products like Super Cruise (Level 2 autonomy in most new models) and the Cruise autonomous driving business are moving forward.
GM isn’t a popular stock, but it should be. Shares are up 55% since I wrote the spotlight article 18 months ago. And with shares trading at 5x earnings and the share count down 20% in that time, I think there are a lot of gains ahead.
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