General Motors (GM), with a current market capitalization of $34.54 billion, has brands which include Buick Chevrolet, GMC, Opel, Cadillac, Daewoo, Holden and Vauxhall. Recent earnings from the company have been a positive surprise for the market, with sales growth of 10.8% and income growth of 62.5%.
Global Trend – Fuel Efficiency
GM is one of the pioneers in making fuel efficient engines which are becoming increasingly popular due to higher fuel prices. The company’s presence in high growth and energy deficient markets like India and China is likely to boost its fortunes multi-fold. It has invested significantly in research and development of new models from its global manufacturing hubs at low costs. This has been backed by able and efficient product and after-sales support. Due to such steps, the company is enjoying robust sales and annual revenue of about $151.84 billion, surpassing most other competitors. It also boasts one of the best operating margins in the industry of around 5.2%. Net income has turned around appreciably since the recession of 2008, and stands at about $5.44 billion.
GM sold over 2.5 million vehicles in China in 2012, an 8.3% increase from 2011. In the U.S., GM sold 2.5 million, marking a 13% gain. China and the U.S. are GM’s two largest markets, and these countries are both seeing fuel economy for passenger vehicles rise, due to a greater number of drivers demanding better fuel economy.
The factors that favor GM in this sector is its low price-to-earnings multiples. With a P/E ratio of about 6.62, the company betters the industry’s average of 12.61 by some margin. To continue reading, click here.