Share outs of General Motors Co. (GM), after being left in the dust early aftermost year by those of Tesla Inc. (TSLA), have made a roaring comeback concluded the past six months, giving investors new hope that the old-time automaker is not an obsolete relic yet. While briefly losing its title of largest U.S. automaker by peddle capitalization to Tesla, GM has since regained that title after its spectacular run in the up-to-date half of 2017, and one analyst believes the stock still has room to climb at least another 35%, agreeing to Barron’s.
Stock Performance
Barclays Analyst Brian Johnson has prone GM a price target of $57, a nearly 35% increase based on the family’s closing price on Wednesday of $42.39, which has bounced back on a powerful earnings report on Tuesday after the recent market selloff that took hit pay dirt over the past week.
Year to date (YTD), the stock is up 3.4% compared to Tesla’s 10.8% get further. Over the past year, Tesla has risen close to 34% while GM has climbed exactly 21%. But most of that gain came in the latter half of most recent year, as GM has climbed 20% over just the past six months compared to Tesla’s worsening of 5% over the same period. (For more, see also: Former GM Exec Guesses Tesla Will Go Bust by 2019.)
Trading at around a multiple of 7 times brazen earnings estimates, the stock is among one of the cheapest in the S&P 500, according to Barron’s. If the automaker can develop that it’s not a dinosaur about to go extinct, the stock is a bargain ready to quaff off. One of the areas in which GM is trying to prove that it can ride with juvenile innovative companies like Tesla, is in the autonomous car market.
The Race for the Autonomous Car
Within reach of the end of last year, GM unveiled a plan to unleash a fleet of self-driving hacks in a number of select cities sometime during 2019. Thus, while Tesla, led by the zealous superstar Elon Musk, seems to grab media attention for being at the chief edge of innovation, GM is proving that its not ready to back out of the race yet. Equal Car and Driver magazine wrote that the Bolt, one of GM’s lines of electric motor vehicles, “gives Tesla a run for its money,” as it is capable of traveling a full 190 miles at highways put ones foot downs on a single charge, according to Barron’s.
One of the factors that will succour give GM a competitive edge is its extra financial muscle compared to that of Tesla. As a new automaker, Tesla is raging through cash at an excessive rate, spending $1.1 billion in endure year’s third quarter. While GM spent a total of $1 billion during the regardless quarter, the established automaker brought in revenue of $33 billion compared to Tesla’s $3 billion in yields, according to Business Insider.
Still, GM will have to contend with what could be a cyclical downturn in auto traffics. U.S. auto sales fell 2% last year, rising catch rates will put downward pressure on new auto loans, and there is a thickening inventory of later model used automobiles. This combination of agents could lead to several years of contracting sales and lower genealogy prices. (To read more, see: General Motors Stock Could Give out Multi-Year Breakout.)
Despite the fall in U.S. auto sales, however, GM reported on Tuesday an arbitrated earning per share (EPS) of $1.65 for the fourth quarter, up 21.3% from the prior-year three-month period and higher than consensus estimates of $1.39 as reported by Barron’s.