GM's (GM) Stock Has an Identity Crisis

July 22, 2016 12:36 PM EDT
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Price: $56.00 +2.56%

Rating Summary:
    23 Buy, 7 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 30 | Down: 4 | New: 24
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General Motors (NYSE: GM) stock, likes its automotive brand portfolio, suffers from an marketing crisis, Barclays analyst Brian Johnson explained today. Just like car buyers can't tell if GM is a luxury car maker (think Cadillac), or a mass market car maker (think Chevy Malibu), investors can't figure out if the company is a growth stock (44% EPS growth) or a dividend stock (5% div yield) - making it unappealing to both growth and income investors.

Johnson highlights that GM's stock did relatively nothing yesterday (+1.7%) despite a huge Q2 beat ($1.86 vs. consensus of $1.52).

He said growth investors prefer the more sexy Tesla (NASDAQ: TSLA), while dividend investors prefer the stable revenue outlook of consumer packaged goods firms or the family-committed dividend at Ford (NYSE: F)

The analyst said it might be time for GM to convince investors of the stability of its dividend in a downturn, as opposed to its ability to continue to grow earnings at this point in the cycle.

While the firm's 2016 EPS estimates ($5.95) are near the top of the Street, their 2017 EPS estimates ($5.47) are near the bottom and they see negative earnings revisions and volatility ahead, keeping them at an Equalweight rating. That said, with a depressed valuation and strong yield, they see the stock outperforming auto suppliers and other large cap dividend yield names.

For an analyst ratings summary and ratings history on General Motors click here. For more ratings news on General Motors click here.

Shares of General Motors closed at $32.03 yesterday.

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