P1246990938kJHXK

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Alankrita Dhaka Bruce Mai Sabina Muhammed Stayson
Varghese Dana Chen Bret Liberatore
General Motors
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Background

• GM was founded in 1908 under the leadership of
  Billy Durant
• Initial capital investment 50,000
• By 1931, GM was already sales leader
• Manufacturing operations in 32 countries
• GM cars are actually sold in 192 countries
• GM set industry standards by coming up with
  Cadillac V-16- with a 16 cylinder engine in
  1930.
• Late 1940s Cadillac and Oldsmobile introduce
  industrys first high compression V-8 engines.
• 1979 - GM introduces compact cars Buick Skylark,
  Chevrolet Citation, Oldsmobile Omega and Pontiac
  Phoenix X- body models.
• 1990s- GM introduces e-GM bringing together
  companys electronic commerce and Internet
  marketing.

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Facts and Operations

• Current Employment 325,000
• Headquarters- Detroit
• 2003 Sales Performance- 15 of Global Market
• Partners Fiat Auto SpA of Italy, Fuji Heavy
  Industries Ltd., Isuzu Motors Ltd. Suzuki Motor
  Corp. of Japan
• Other Ventures
• GMAC Financial Services
• GM OnStar
• GM Electro-Motive Division
• GM Service and Parts Operations
• GM Powertrain

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Management
Robert A. LutzVice Chairman, Product
Development Chairman, GM North America
G. Richard Wagoner, Jr.Chairman CEO
John M. Devine, Vice Chairman CFO
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Automotive Brands


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Financial Ratio Analysis - Price Ratios
Financial data in U.S. dollars
GMs Growth Rate is POOR
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Financial Ratio Analysis Price Ratios
Financial data in U.S. dollars
GMs has POOR price ratios
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Financial Ratio Analysis Profitability Ratio
Profitability Margins are FAIR
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Financial Ratio Analysis Financial Condition
Ratios
Financial data in U.S. dollars
GMs financial condition is FAIR
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Financial Ratio Analysis Management Efficiency
Ratios
Financial data in U.S. dollars
GMs management efficiency ratios are FAIR
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Financial Ratio Analysis Investment Return
Financial data in U.S. dollars
GMs investment returns are FAIR
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Holding Period Return
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Free Cash Flow to Equity
Estimated Growth Rate 27.7
Shares 564,600 million Current Price
43.30
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Risk Analysis
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WACC
GMs WACC is comparatively low for such a highly
leveraged firm.
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Ke
Ke (DCF Model) 0.0367 Ke (CAPM Model)
0.0340 Therefore the stock is under priced.
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Fiscal year 2003 GM Capital Structure
GM has over 94 of debt over the last three years
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Market Efficiency
No-Form
Non-Company Specific News
Mar. 29th 46.60
Apr. 1st 47.09
March 31, 2004
News OPEC Agrees to cut Oil output.
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Market Efficiency
Weak Form
Company Specific News
June 30th 46.59.
July 6th 44.55.
News Sales fell 15 in June.
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M M Proposition Chart
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M M Proposition Chart

• GM does not fall into any of the three models in
  the MM Proposition
• Why? Reason for this discrepancy can be that we
  have taken into account just three years of data.

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Strengths Weaknesses

• Strengths
• ROE
• Revenue/Employee
• Inventory Turnover
• HPR
• Low WACC

• Weaknesses
• Sales/EPS Growth
• P/E Ratio
• Leverage Ratio

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5 Year Stock Price Chart
The 5 year current price has dropped to 43.30
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Analyst Opinion
Overall recommendation is HOLD
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Buy, Sell or Hold

• Analyst Opinion
• - majority say HOLD
• 5 Year Stock Price
• -Slightly above 5 year low/ HOLD
• Holding Period Return
• -3.04 in 2004/ HOLD
• Group Recommendation
• -HOLD