Times have been tough lately for US automakers not named Tesla (TSLA).  Yesterday, Mark Fields resigned as Ford (F) CEO after the company’s share price declined from $17+ to $11 during his tenure.  For General Motors (GM), things haven’t been much better.  With just a 9% gain in the last year and a decline of 4.5% YTD, the stock has been a big underperformer versus the broader market of late.  As just one example of how out of favor GM has become, the stock is currently trading for just 5x trailing earnings and has a dividend yield of 4.6%!  It’s not often that you see a stock yield nearly as much as its P/E ratio.  When this is the case, it either means that the market is expecting earnings to decline (which will push up the P/E ratio) or the dividend to decline, which will lower the yield.  In the case of GM, though, the stock has been yielding nearly as much or more than its earnings multiple for quite some time now (shaded area in chart).  Late last year, the stock rallied, which helped to push the spread between the P/E ratio and the yield wider, but as concerns over a peak in US auto sales have increased, the stock has come under renewed pressure, causing a narrowing of the spread.

Like what you see? Start a 14-day free trial to Bespoke’s premium research for instant access to our entire suite of offerings.

GM vs Yield

 

Print Friendly, PDF & Email