Intrinsic value of General Motors - GM

Previous Close

$41.67

  Intrinsic Value

$65.75

stock screener

  Rating & Target

str. buy

+58%

Previous close

$41.67

 
Intrinsic value

$65.75

 
Up/down potential

+58%

 
Rating

str. buy

We calculate the intrinsic value of GM stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 60.7

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  9.20
  2.00
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
Revenue, $m
  166,380
  169,708
  173,611
  178,073
  183,082
  188,632
  194,722
  201,354
  208,533
  216,266
  224,566
  233,445
  242,920
  253,007
  263,728
  275,105
  287,161
  299,923
  313,418
  327,678
  342,734
  358,620
  375,374
  393,034
  411,641
  431,238
  451,871
  473,588
  496,442
  520,484
  545,773
Variable operating expenses, $m
 
  118,965
  121,701
  124,829
  128,340
  132,231
  136,500
  141,149
  146,181
  151,603
  157,421
  163,645
  170,287
  177,358
  184,874
  192,849
  201,300
  210,246
  219,706
  229,702
  240,256
  251,393
  263,137
  275,517
  288,560
  302,298
  316,761
  331,985
  348,006
  364,859
  382,587
Fixed operating expenses, $m
 
  42,311
  43,369
  44,453
  45,564
  46,703
  47,871
  49,068
  50,294
  51,552
  52,841
  54,162
  55,516
  56,904
  58,326
  59,784
  61,279
  62,811
  64,381
  65,991
  67,640
  69,331
  71,065
  72,841
  74,662
  76,529
  78,442
  80,403
  82,413
  84,474
  86,585
Total operating expenses, $m
  156,835
  161,276
  165,070
  169,282
  173,904
  178,934
  184,371
  190,217
  196,475
  203,155
  210,262
  217,807
  225,803
  234,262
  243,200
  252,633
  262,579
  273,057
  284,087
  295,693
  307,896
  320,724
  334,202
  348,358
  363,222
  378,827
  395,203
  412,388
  430,419
  449,333
  469,172
Operating income, $m
  9,545
  8,432
  8,541
  8,791
  9,177
  9,698
  10,351
  11,137
  12,057
  13,112
  14,305
  15,638
  17,117
  18,746
  20,529
  22,472
  24,582
  26,866
  29,331
  31,985
  34,837
  37,896
  41,172
  44,676
  48,418
  52,411
  56,667
  61,200
  66,023
  71,151
  76,601
EBITDA, $m
  19,953
  13,794
  14,027
  14,418
  14,963
  15,658
  16,504
  17,500
  18,646
  19,946
  21,401
  23,015
  24,794
  26,741
  28,862
  31,165
  33,656
  36,344
  39,235
  42,340
  45,667
  49,228
  53,034
  57,096
  61,426
  66,038
  70,946
  76,165
  81,710
  87,598
  93,847
Interest expense (income), $m
  2,323
  1,796
  1,907
  2,034
  2,179
  2,341
  2,521
  2,718
  2,933
  3,166
  3,417
  3,686
  3,974
  4,281
  4,608
  4,956
  5,325
  5,716
  6,130
  6,567
  7,030
  7,518
  8,033
  8,576
  9,149
  9,752
  10,388
  11,057
  11,761
  12,502
  13,282
Earnings before tax, $m
  11,684
  6,635
  6,634
  6,757
  6,999
  7,357
  7,830
  8,419
  9,123
  9,946
  10,888
  11,952
  13,143
  14,464
  15,920
  17,516
  19,257
  21,150
  23,201
  25,418
  27,807
  30,378
  33,139
  36,100
  39,269
  42,659
  46,279
  50,143
  54,262
  58,649
  63,319
Tax expense, $m
  2,416
  1,792
  1,791
  1,824
  1,890
  1,986
  2,114
  2,273
  2,463
  2,685
  2,940
  3,227
  3,549
  3,905
  4,298
  4,729
  5,199
  5,711
  6,264
  6,863
  7,508
  8,202
  8,948
  9,747
  10,603
  11,518
  12,495
  13,539
  14,651
  15,835
  17,096
Net income, $m
  9,427
  4,844
  4,843
  4,933
  5,109
  5,370
  5,716
  6,146
  6,660
  7,260
  7,948
  8,725
  9,595
  10,559
  11,622
  12,787
  14,058
  15,440
  16,937
  18,555
  20,299
  22,176
  24,192
  26,353
  28,667
  31,141
  33,784
  36,604
  39,611
  42,814
  46,223

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  24,415
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  221,690
  201,314
  205,944
  211,237
  217,179
  223,763
  230,987
  238,854
  247,370
  256,543
  266,389
  276,922
  288,161
  300,127
  312,845
  326,340
  340,642
  355,780
  371,789
  388,704
  406,564
  425,410
  445,284
  466,232
  488,304
  511,551
  536,027
  561,789
  588,899
  617,419
  647,418
Adjusted assets (=assets-cash), $m
  197,275
  201,314
  205,944
  211,237
  217,179
  223,763
  230,987
  238,854
  247,370
  256,543
  266,389
  276,922
  288,161
  300,127
  312,845
  326,340
  340,642
  355,780
  371,789
  388,704
  406,564
  425,410
  445,284
  466,232
  488,304
  511,551
  536,027
  561,789
  588,899
  617,419
  647,418
Revenue / Adjusted assets
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
  0.843
Average production assets, $m
  26,275
  26,814
  27,431
  28,135
  28,927
  29,804
  30,766
  31,814
  32,948
  34,170
  35,481
  36,884
  38,381
  39,975
  41,669
  43,467
  45,371
  47,388
  49,520
  51,773
  54,152
  56,662
  59,309
  62,099
  65,039
  68,136
  71,396
  74,827
  78,438
  82,237
  86,232
Working capital, $m
  -8,978
  -9,843
  -10,069
  -10,328
  -10,619
  -10,941
  -11,294
  -11,679
  -12,095
  -12,543
  -13,025
  -13,540
  -14,089
  -14,674
  -15,296
  -15,956
  -16,655
  -17,396
  -18,178
  -19,005
  -19,879
  -20,800
  -21,772
  -22,796
  -23,875
  -25,012
  -26,209
  -27,468
  -28,794
  -30,188
  -31,655
Total debt, $m
  75,123
  54,495
  58,111
  62,245
  66,886
  72,028
  77,670
  83,814
  90,465
  97,629
  105,319
  113,545
  122,323
  131,669
  141,601
  152,141
  163,310
  175,133
  187,636
  200,847
  214,796
  229,514
  245,036
  261,397
  278,635
  296,790
  315,906
  336,026
  357,199
  379,473
  402,902
Total liabilities, $m
  177,854
  157,226
  160,842
  164,976
  169,617
  174,759
  180,401
  186,545
  193,196
  200,360
  208,050
  216,276
  225,054
  234,400
  244,332
  254,872
  266,041
  277,864
  290,367
  303,578
  317,527
  332,245
  347,767
  364,128
  381,366
  399,521
  418,637
  438,757
  459,930
  482,204
  505,633
Total equity, $m
  43,836
  44,088
  45,102
  46,261
  47,562
  49,004
  50,586
  52,309
  54,174
  56,183
  58,339
  60,646
  63,107
  65,728
  68,513
  71,469
  74,601
  77,916
  81,422
  85,126
  89,038
  93,165
  97,517
  102,105
  106,939
  112,030
  117,390
  123,032
  128,969
  135,215
  141,784
Total liabilities and equity, $m
  221,690
  201,314
  205,944
  211,237
  217,179
  223,763
  230,987
  238,854
  247,370
  256,543
  266,389
  276,922
  288,161
  300,128
  312,845
  326,341
  340,642
  355,780
  371,789
  388,704
  406,565
  425,410
  445,284
  466,233
  488,305
  511,551
  536,027
  561,789
  588,899
  617,419
  647,417
Debt-to-equity ratio
  1.714
  1.240
  1.290
  1.350
  1.410
  1.470
  1.540
  1.600
  1.670
  1.740
  1.810
  1.870
  1.940
  2.000
  2.070
  2.130
  2.190
  2.250
  2.300
  2.360
  2.410
  2.460
  2.510
  2.560
  2.610
  2.650
  2.690
  2.730
  2.770
  2.810
  2.840
Adjusted equity ratio
  0.098
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219
  0.219

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  9,427
  4,844
  4,843
  4,933
  5,109
  5,370
  5,716
  6,146
  6,660
  7,260
  7,948
  8,725
  9,595
  10,559
  11,622
  12,787
  14,058
  15,440
  16,937
  18,555
  20,299
  22,176
  24,192
  26,353
  28,667
  31,141
  33,784
  36,604
  39,611
  42,814
  46,223
Depreciation, amort., depletion, $m
  10,408
  5,363
  5,486
  5,627
  5,785
  5,961
  6,153
  6,363
  6,590
  6,834
  7,096
  7,377
  7,676
  7,995
  8,334
  8,693
  9,074
  9,478
  9,904
  10,355
  10,830
  11,332
  11,862
  12,420
  13,008
  13,627
  14,279
  14,965
  15,688
  16,447
  17,246
Funds from operations, $m
  15,203
  10,206
  10,329
  10,560
  10,894
  11,331
  11,869
  12,508
  13,250
  14,094
  15,044
  16,102
  17,271
  18,554
  19,956
  21,480
  23,132
  24,917
  26,841
  28,910
  31,130
  33,508
  36,053
  38,773
  41,674
  44,768
  48,063
  51,570
  55,299
  59,261
  63,469
Change in working capital, $m
  -1,342
  -193
  -226
  -259
  -291
  -322
  -353
  -385
  -416
  -449
  -481
  -515
  -550
  -585
  -622
  -660
  -699
  -740
  -783
  -827
  -873
  -921
  -972
  -1,024
  -1,079
  -1,137
  -1,197
  -1,260
  -1,325
  -1,394
  -1,467
Cash from operations, $m
  16,545
  10,399
  10,555
  10,818
  11,185
  11,653
  12,222
  12,893
  13,666
  14,543
  15,526
  16,617
  17,820
  19,139
  20,577
  22,140
  23,831
  25,657
  27,624
  29,737
  32,003
  34,430
  37,025
  39,797
  42,754
  45,905
  49,260
  52,829
  56,624
  60,656
  64,936
Maintenance CAPEX, $m
  0
  -5,255
  -5,363
  -5,486
  -5,627
  -5,785
  -5,961
  -6,153
  -6,363
  -6,590
  -6,834
  -7,096
  -7,377
  -7,676
  -7,995
  -8,334
  -8,693
  -9,074
  -9,478
  -9,904
  -10,355
  -10,830
  -11,332
  -11,862
  -12,420
  -13,008
  -13,627
  -14,279
  -14,965
  -15,688
  -16,447
New CAPEX, $m
  -29,166
  -539
  -617
  -705
  -791
  -877
  -962
  -1,048
  -1,134
  -1,222
  -1,311
  -1,403
  -1,497
  -1,594
  -1,694
  -1,797
  -1,905
  -2,016
  -2,132
  -2,253
  -2,379
  -2,510
  -2,647
  -2,790
  -2,940
  -3,096
  -3,260
  -3,431
  -3,611
  -3,799
  -3,996
Cash from investing activities, $m
  -35,643
  -5,794
  -5,980
  -6,191
  -6,418
  -6,662
  -6,923
  -7,201
  -7,497
  -7,812
  -8,145
  -8,499
  -8,874
  -9,270
  -9,689
  -10,131
  -10,598
  -11,090
  -11,610
  -12,157
  -12,734
  -13,340
  -13,979
  -14,652
  -15,360
  -16,104
  -16,887
  -17,710
  -18,576
  -19,487
  -20,443
Free cash flow, $m
  -19,098
  4,606
  4,576
  4,627
  4,766
  4,991
  5,299
  5,692
  6,169
  6,731
  7,380
  8,118
  8,947
  9,869
  10,888
  12,009
  13,233
  14,567
  16,014
  17,580
  19,269
  21,089
  23,046
  25,145
  27,394
  29,801
  32,373
  35,119
  38,048
  41,169
  44,493
Issuance/(repayment) of debt, $m
  22,124
  3,169
  3,616
  4,134
  4,641
  5,142
  5,642
  6,144
  6,651
  7,165
  7,689
  8,226
  8,778
  9,346
  9,933
  10,540
  11,169
  11,823
  12,503
  13,211
  13,949
  14,718
  15,522
  16,361
  17,238
  18,156
  19,116
  20,120
  21,172
  22,274
  23,429
Issuance/(repurchase) of shares, $m
  -2,500
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  19,507
  3,169
  3,616
  4,134
  4,641
  5,142
  5,642
  6,144
  6,651
  7,165
  7,689
  8,226
  8,778
  9,346
  9,933
  10,540
  11,169
  11,823
  12,503
  13,211
  13,949
  14,718
  15,522
  16,361
  17,238
  18,156
  19,116
  20,120
  21,172
  22,274
  23,429
Total cash flow (excl. dividends), $m
  196
  7,775
  8,192
  8,761
  9,407
  10,133
  10,942
  11,836
  12,820
  13,896
  15,070
  16,344
  17,724
  19,215
  20,821
  22,548
  24,402
  26,390
  28,517
  30,790
  33,218
  35,808
  38,567
  41,506
  44,632
  47,956
  51,488
  55,239
  59,220
  63,444
  67,922
Retained Cash Flow (-), $m
  -3,965
  -870
  -1,014
  -1,159
  -1,301
  -1,442
  -1,582
  -1,723
  -1,865
  -2,009
  -2,156
  -2,307
  -2,461
  -2,621
  -2,785
  -2,955
  -3,132
  -3,315
  -3,506
  -3,704
  -3,911
  -4,127
  -4,352
  -4,588
  -4,834
  -5,091
  -5,360
  -5,642
  -5,937
  -6,246
  -6,570
Prev. year cash balance distribution, $m
 
  618
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  7,523
  7,178
  7,602
  8,106
  8,691
  9,359
  10,113
  10,955
  11,887
  12,913
  14,037
  15,263
  16,594
  18,036
  19,593
  21,271
  23,074
  25,011
  27,086
  29,307
  31,681
  34,215
  36,918
  39,798
  42,865
  46,128
  49,597
  53,283
  57,198
  61,352
Discount rate, %
 
  6.30
  6.62
  6.95
  7.29
  7.66
  8.04
  8.44
  8.86
  9.31
  9.77
  10.26
  10.78
  11.31
  11.88
  12.47
  13.10
  13.75
  14.44
  15.16
  15.92
  16.72
  17.55
  18.43
  19.35
  20.32
  21.33
  22.40
  23.52
  24.70
  25.93
PV of cash for distribution, $m
 
  7,077
  6,315
  6,215
  6,117
  6,010
  5,885
  5,734
  5,553
  5,336
  5,082
  4,793
  4,470
  4,119
  3,746
  3,360
  2,969
  2,581
  2,207
  1,853
  1,527
  1,233
  975
  755
  570
  421
  302
  211
  144
  95
  61
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

General Motors Company designs, builds and sells cars, trucks, crossovers and automobile parts. The Company's segments include GM North America (GMNA), GM Europe (GME), GM International Operations (GMIO), GM South America (GMSA) and General Motors Financial Company, Inc. (GM Financial). The Company provides automotive financing services through General Motors Financial Company, Inc. The Company develops, manufactures and/or markets vehicles in North America under the brands, including Buick, Cadillac, Chevrolet and GMC. The Company also develops, manufactures and/or markets vehicles outside North America under the brands, including Buick, Cadillac, Chevrolet, GMC, Holden, Opel and Vauxhall. The Company offers a range of after-sale vehicle services and products through the dealer network, such as maintenance, light repairs, collision repairs, vehicle accessories and extended service warranties. GM Financial is an automotive finance company, which provides automobile finance solutions.

FINANCIAL RATIOS  of  General Motors (GM)

Valuation Ratios
P/E Ratio 6.6
Price to Sales 0.4
Price to Book 1.4
Price to Tangible Book
Price to Cash Flow 3.8
Price to Free Cash Flow -5
Growth Rates
Sales Growth Rate 9.2%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 26.6%
Cap. Spend. - 3 Yr. Gr. Rate 24.3%
Financial Strength
Quick Ratio 1
Current Ratio 0.2
LT Debt to Equity 117.1%
Total Debt to Equity 171.4%
Interest Coverage 6
Management Effectiveness
Return On Assets 5.4%
Ret/ On Assets - 3 Yr. Avg. 4.9%
Return On Total Capital 8.5%
Ret/ On T. Cap. - 3 Yr. Avg. 8%
Return On Equity 22.5%
Return On Equity - 3 Yr. Avg. 19.5%
Asset Turnover 0.8
Profitability Ratios
Gross Margin 12.8%
Gross Margin - 3 Yr. Avg. 11.2%
EBITDA Margin 14.7%
EBITDA Margin - 3 Yr. Avg. 11.5%
Operating Margin 5.7%
Oper. Margin - 3 Yr. Avg. 3.5%
Pre-Tax Margin 7%
Pre-Tax Margin - 3 Yr. Avg. 4.9%
Net Profit Margin 5.7%
Net Profit Margin - 3 Yr. Avg. 4.9%
Effective Tax Rate 20.7%
Eff/ Tax Rate - 3 Yr. Avg. 0.5%
Payout Ratio 25.1%

GM stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the GM stock intrinsic value calculation we used $166380 million for the last fiscal year's total revenue generated by General Motors. The default revenue input number comes from 2016 income statement of General Motors. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our GM stock valuation model: a) initial revenue growth rate of 2% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6.3%, whose default value for GM is calculated based on our internal credit rating of General Motors, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of General Motors.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of GM stock the variable cost ratio is equal to 70.1%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $41279 million in the base year in the intrinsic value calculation for GM stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.5% for General Motors.

Corporate tax rate of 27% is the nominal tax rate for General Motors. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the GM stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for GM are equal to 15.8%.

Life of production assets of 2.6 years is the average useful life of capital assets used in General Motors operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for GM is equal to -5.8%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $43836 million for General Motors - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 1457.14 million for General Motors is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of General Motors at the current share price and the inputted number of shares is $60.7 billion.

RELATED COMPANIES Price Int.Val. Rating
F Ford Motor 12.58 10.78  hold
TSLA Tesla 328.91 1,339.81  str.buy
TM Toyota Motor A 123.93 173.50  buy
HMC Honda Motor AD 33.33 8.72  str.sell

COMPANY NEWS

▶ Who are Ford's (F) main suppliers?   [Dec-12-17 11:24AM  Investopedia]
▶ Why General Motors May Be The Real Deal Among 'Mobility' Companies   [Dec-08-17 04:03PM  Investor's Business Daily]
▶ How to Trade General Motors   [04:34PM  Bloomberg Video]
▶ GMs Latest Weapon in Pickup Truck Wars: Carbon Fiber   [Dec-06-17 11:57PM  The Wall Street Journal]
▶ Three Under-the-Radar Stock Picks   [03:51PM  Motley Fool]
▶ GM's Latest Weapon in Pickup Truck Wars: Carbon Fiber   [08:51AM  The Wall Street Journal]
▶ GMs Latest Weapon in Pickup Truck Wars: Carbon Fiber   [08:00AM  The Wall Street Journal]
▶ GM's on the Right Track   [07:00AM  Morningstar]
▶ 2 Top Auto Stocks to Consider Buying Now   [06:32AM  Motley Fool]
▶ General Motors Stock Needs a Tune-Up   [04:10PM  TheStreet.com]
▶ 6 Most Important Things in Business Today   [05:08AM  24/7 Wall St.]
▶ US Automakers Report Flat November Sales   [02:38PM  GuruFocus.com]
▶ How GM Helped Power the Fastest-Growing Auto Maker in China   [12:27AM  The Wall Street Journal]
▶ How GM Helped Power the Fastest-Growing Auto Maker in China   [12:43PM  The Wall Street Journal]
▶ Carmakers accelerate, backfire as 2017 winds down   [Dec-02-17 10:25AM  American City Business Journals]
▶ California regulators nix rules limiting carmaker liability   [Dec-01-17 07:36PM  Associated Press]
▶ November U.S. Auto Sales: Here's How The Big 3 Performed   [04:03PM  Investor's Business Daily]
Financial statements of GM
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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