GM's (GM) Stock Has an Identity Crisis
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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.
Shares of General Motors closed at $32.03 yesterday.
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