Antonio Arias
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GM Legacy

General Motors, which is also known as GM is the largest American multinational corporation headquartered in Detroit, that designs, manufactures, markets and distributes vehicles and vehicle parts and sells financial services. The current company, General Motors Company LLC, ("new GM"), was founded in 2009, after the bankruptcy of the General Motors Corporation ("old GM") which was a leader of the car market for about 77 years. Nowadays GM is the 3rd largest carmaker with 7.2 million sales, which manufactures in 35 countries and does business in 192 states.

Chart 1. GM Highlights


This chart shows that worldwide net sales estimated $ 156 billion in 2014. Therefore the net income attributable to common stockholders and P/E diluted were $ 2.8 billion and $ 1.65 respectively in the same period. So, revenue growth rate was 102.4 %. At the same time net profit rate growth declined by 34.5 % in 2014 in comparison with 2012.

Table 1. General Motors Consolidated Statement of Cash Flows


Net cash provided by operating activities was $ 10.058 million in 2014, that is $ 2.572 million less than in previous year. Despite 21 % net cash decline there are several positive moments which underlines financial potential of the company.

In 2014 net cash used in investing activities balance was $ 1.606 million more than in 2013. The negative figure (15.698) emphasizes active investments in non-current assets. That is why GM enlarges its production capacity.

Net cash provided by financing activities was 152 % more than in previous year. So this ratio is positive therefore GM financing its activity not only with use of note receivable and undistributed profit, but also by external investments.

Table 2. ROS, ROA & ROE


To be more precise, return on investment increased by 22.7 % in comparison with 2012 which was related to the sales growth. Current automotive downtrend effected on efficiency use of assets by 2.3 % and assets growth and external investments do not stimulate ROA and return on equity ratios boost. Moreover, during 4 years the equity efficiency declined by 7 % in 2015.

Chart 2. Daily GM Chart



According to this chart, there was a significant decline in August 24 and this movement led to a "hammer" figure - bull signal. At the moment the stock is in consolidation phase around $ 36 and financial statement of the company underlines there is no reason to break a $ 39 level ( max 2015).

To sum up, new GM, old problems, illiquid assets, honored legacy. Buy or short, buy and hold, short and short? Where is business angel?