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Using Return on Invested Capital as a lens, we take a look at which companies and sub-industries capture the highest returns within the automotive value chain. We calculate ROIC across 27 companies within industries including dealers, OEMs, parts suppliers, aftermarket retailers, and service providers.
On April 26th GM reported revenue of $36.1B beating cons. of $34.3B and our $33.0B. N.A EBIT margins were 120 bps below cons. of 9.2%, in part due to retooling downtime, but mgmt. still expects 10% full year margins. GMI met consensus, while GMF had a strong Q and delivered EBIT 60% above cons. Q1 EPS-adj. of $1.44 beat Cons. of $1.24 and our $1.02. GM shares were flat vs. a 1% gain for the S&P 500.
This morning (02/06/18), GM reported Total Revenue of $37,697 beating Consensus of $36,977 and just missing our $37,953. North American EBIT margins were 130 bps higher than consensus of 8.7%. GMSA turned in a second consecutive profitable quarter, albeit EBIT-adj. came in $20M below consensus of $97M. GMIO and GM Financial both posted strong EBIT beats ($339M and $301M vs. Cons. $318M and $228M, respectively). Q4 EPS-adj. of $1.65 was well above consensus of $1.39 and our $1.33. GM Shares climbed 6% higher on the news.
Most of you cover 50 – 200 stocks and therefore don’t have the liberty of being as into the weeds on every name – that’s our job. To help you do yours, we have created a comprehensive, but chart-heavy, guide to our coverage that is meant to have shelf life and that can be referred back to when you are ready to dig more into our coverage.
The tax overhaul is adding a lot of complexity to fundamentals as investors and companies we speak with struggle to digest consensus expectations and current valuation metrics. We sifted through both Factset and Bloomberg estimates to calculate a bottoms-up consensus of ONLY analysts that have revised estimates on tax reform.
In our first tax reform note we studied numerous angles on tax reform. As a continuation, we are studying additional angles and also adjusting numbers and price targets (Exhibit 1). While we remain concerned of the long-term risk/reward of tax reform, near-term we expect consensus EPS revisions to occur as the rewards are easier to forecast than the risks.
After years of inflating asset prices via credit let’s unwind QE, raise interest rates, meddle in regional wars, reduce homeownership incentives, rush a radical tax overhaul including reducing corporate taxes, rebalance personal taxes, and expanding the fiscal deficit, all during a period of trough unemployment. Let’s just throw all of the economic models out, nothing can go wrong here, I’m psyched let’s go shoot some birds
GM hosted an autonomy and mobility focused investor day on Thursday (11/30/2017) in GM Cruise’s hometown San Francisco. We believe the bar was fairly high coming into the event with much of the information having already trickled out in prior conferences. In summary, management let investors know that it is diligently doing its homework on strategy, but, by and large, it’s too early to do anything other than to position for optionality. In the meantime the focus has to be on the less sexy technical aspects of finalizing a safe, first-to-market minimum viable product. Shares were down -1.75%.
This morning (10/24/17), GM reported Total Revenue of $33,556 versus Consensus of $33,806 and our $35,713. North American EBIT margins were 30 bps higher than consensus of 8%, leading to a slight EBIT beat despite a ~3% miss on revenue. GMSA turned its first profit since 2014 versus consensus of flat, while GMIO and GM Financial both posted strong EBIT beats as well. Q3 EPS of $1.32 was well above consensus of $1.11 and our $1.02. GM Shares climbed 3% higher on the news.
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