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Morningstar's General Motors Co Stock Analysis

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We Take Optimism From GM Not Lowering Its Guidance Despite So Much Macroeconomic Uncertainty

Analyst Note

| David Whiston, CFA, CPA, CFE |

We are not changing our GM fair value estimate following what we see as a solid first quarter and one that could have been much worse given U.S. inflation, high commodity costs, and ongoing supply chain issues reducing vehicle production. The buyout of SoftBank’s stake in Cruise (see our March 20 note) means the autonomous vehicle business will now be consolidated in GM’s tax returns, which means a lower overall tax rate now expected of about 20% versus 22%-24%. This change caused GM to raise its 2022 adjusted diluted EPS guidance by $0.25 on each end to $6.50-$7.50. Given the headwinds we mentioned, we were concerned GM would lower its guidance, but the total company adjusted EBIT outlook remains $13 billion-$15 billion and adjusted automotive free cash flow remains $7 billion-$9 billion. The latter has a long way to go in the final three quarters, given it was just $6 million in the first quarter. Still, it improved from a $1.9 billion burn in first-quarter 2021 thanks mostly to a $2.4 billion improvement in working capital, likely from inventory.

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General Motors Co's Company Profile

Business Description

General Motors Co. emerged from the bankruptcy of General Motors Corp. (old GM) in July 2009. GM has eight brands and operates under four segments: GM North America, GM International, Cruise, and GM Financial. The United States now has four brands instead of eight under old GM. The company lost its U.S. market share leader crown in 2021 with share down 280 basis points to 14.6%, but we expect GM to reclaim the top spot in 2022 due to 2021 suffering from the chip shortage. GM Financial became the company's captive finance arm in October 2010 via the purchase of AmeriCredit.

300 Renaissance Center
Detroit, MI, 48265-3000
T +1 313 667-1500
Sector Consumer Cyclical
Industry Auto Manufacturers
Most Recent Earnings Mar 31, 2022
Fiscal Year End Dec 31, 2022
Stock Type Cyclical
Employees 157,000

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