GM's (GM) P/E Is Above Ford's (F)

Based on estimates at StreetInsider.com, at its opening price of $35 per share, GM (NYSE: GM) is trading at a multiple of 8.75x 2010 EPS.

GM has earned $5 billion in the first three quarters, and the company has stated that fourth quarter earnings will be below all of the prior quarters. The lowest quarter so far this year was $1.2 billion. StreetInsider is estimating that GM will earn $1 billion in the fourth quarter. This gets you to $6 billion in profit. Take the 1.5 billion shares outstanding and you get to EPS of $4 per share.

So based on EPS of $4 and a share price of $35, you get to a P/E ratio of 8.75.

As a comparison, Ford (NYSE: F) has a multiple of 8x.

Has GM earned a premium multiple to Ford?

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