GMare the two largest automobile brands in the United States. Both Ford and GM are leaders and fierce competitors in the global automobile industry with portfolios of brands and models that compete in various market segments in the U.
Earnings tell the true story, and last month both companies reported two slightly different quarters.
First, consider GM earnings on October 25th. Segment results for GM: The EBIT-adjusted margin rate was 8. Ford, however, reported a very different quarter, but the stock results were about the same.
Ford, like GM, depends on diverse worldwide markets to help deal with cyclical tops as economies expand or contract.
Geographical breakdowns for Ford in Q3 illustrate this point: However, Ford Credit delivered the best quarterly profit sinceand provides reliable cash flow for the company. That initial election shock wore off as the mad rotation into and out of sectors continues amid Trumponomic speculationand Ford and GM rose with the tide.
SPY rallying more than percent off the post-election lows. Chart courtesy of Google finance.
In terms of stock performance, GM steadily outperformed Ford during this current cycle, but lagged the broad market. However, GM gained a healthy balance sheet courtesy of government bailouts, and much of that outperformance can be attributed to write-offs and tax exemptions, which boosted the bottom line.
These irregularities come at the expense of taxpayers, with shareholders reaping the benefits. As the chart below indicates, the top for this current cycle was priced in circa late and early The Rebuilding of America The initial stock reaction to the election stemmed from worries over Trump trade politics Ford and Mexico specificallyand those concerns cannot be discounted.
The rebuilding of America requires pickup trucks, and Ford and GM make pickup trucks, lots of them, and the stocks finally took off a week later.
The precariousness of this situation, for the moment, seems to be of no concern to Wall Street. Fundamentals should always be a concern, and both companies trade at reasonable valuations, possess strong balance sheets with significant cash reserves, and pay healthy dividends with shareholder friendly capital expenditures continuously in the pipeline.
A sentiment shift could be upon us, and both stocks look like bargains should this cycle continue strong.
The last recession, and the near-death event for some automakers like GM, created clouds of skepticism regarding the sector, resulting in bargain valuations as the norm.
The airline sector suffers from the same assumption or history of large capital investments turning south, and airline stocks also trade at lower valuations despite a strong profit cycle, low input costs, and healthy balance sheets. Warren Buffett buying the sector recently changed some of that sentiment, for now.
How long the market ignores the new GM or Ford can be frustrating for bulls, but the dividends paid by both companies help to ease the pain as well as justify the investment.
The economy, recalls, and some charts.
UUP plays with profits when companies bring this money home. The possibility of an earnings trough, and a continuation of auto sales growth, could become a reality with a healthy mix of infrastructure spending and corporate tax cuts.In , General Motors acquired the Reliance Motor Truck Company of Owosso, Michigan, and the Rapid Motor Vehicle Company of Pontiac, Michigan, the 5/5(1).
In discussing the comparison of General Motors and Ford I found out the best way to compare them also was by ratios. There are three ways to classify these are (1)Liquidity analysis, (2)solvency analysis, and (3)profitability analysis.4/4(2). Ford Motor and General Motors have both given their shareholders big gains over the last year, but GM has been the better stock.
The company behind the Chevrolet, Buick, Cadillac, and GMC brands. Comparison and Contrast of General Motors and Toyota Motor General Motors Corporation History General Motors (GM) was founded in in Flint, Michigan, as a holding company for Buick, then controlled by William C.
5/5(1). Online Stock Comparison - Compare General Motors Company (GM) to four other stocks with leslutinsduphoenix.com's stock comparison tool. Hot Topics: ETFs Ford Motor Company. But compared to GM and Ford, it hasn't shipped anywhere near as many cars, generates a fraction of the revenue, and isn't turning a profit ten years into its existence.