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General Motors (NYSE: $GM) Announces $10B Share Buy-back Program

General Motors Company (NYSE: $GM) is involved in the design, construction, and sale of trucks, crossovers, cars, and automotive components worldwide. Additionally, the company offers software-enabled services and subscriptions. Through its segment, General Motors Financial Company, Inc. (GM Financial), the company provides automotive financing services.

GM North America (GMNA) and GM International (GMI) are responsible for developing, manufacturing, and marketing vehicles under the Buick, Cadillac, Chevrolet, and GMC brands. The company is divided into segments, including GMNA, GMI, Cruise, and GM Financial.

The Cruise segment focuses on the advancement and commercialization of autonomous vehicle technology. General Motors also provides OnStar and connected services to approximately 21 million connected vehicles globally through subscription-based and complimentary services.

Furthermore, the company is actively working on hydrogen fuel cell applications across various sectors, including transportation, mobile power generation, class seven/eight trucks, locomotives, aerospace, and marine applications.

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General Motors (NYSE: $GM) stock price today

As of November 29, 2023, General Motors’ stock price stands at $31.60 per share, marking a $2.71 increase or a 9.38% rise from the previous day’s closing price of $28.89. The stock opened at $31.87, reaching a high of $31.92 and a low of $31.42 throughout the day. The trading volume amounted to 85,193,705 shares, significantly surpassing the average volume of 18,572,990 shares.

General Motors holds a market capitalization of $43.28 billion and boasts a price-to-earnings ratio of 4.43. Over the past 52 weeks, the stock has achieved a high of $43.63 and a low of $26.30.

The company disclosed its third-quarter earnings on October 24, 2023, reporting a revenue of $44.13 billion, indicating a 5.35% year-over-year increase, and a net income of $3.06 billion, reflecting a 7.29% year-over-year decrease.

“I’m not happy with our stock price” – GM CEO on $10B Buyback

General Motors (GM) shares experienced an increase on Wednesday following the automaker’s announcement of a new $10 billion stock buyback program. In an interview with Yahoo Finance’s Brian Sozzi, GM CEO Mary Barra discussed how the initiative aims to bolster a struggling share price that she expresses dissatisfaction with.

Barra acknowledges the challenges posed by the pandemic, chip shortages, and recent labor tensions with the UAW, which have introduced volatility and uncertainty. Implementing the stock buyback is seen as a measure to bring “certainty” to the situation while signaling confidence in GM’s future, even amid ongoing macroeconomic challenges.

Video Transcript:

– This is a significant figure, Mary. It certainly grabs headlines. Why do you believe it was necessary to take this step and convey that message to investors?

MARY BARRA: Well, we’re not content. Personally, I am not satisfied with the current share price. Considering what we’ve navigated through, including the impacts of COVID, semiconductor shortages, and the recent uncertainties surrounding the UAW strike and broader labor issues, we now have a sense of certainty.

We’ve always adhered to a capital allocation framework, with our target cash averaging around $18 to $20 billion. Given our current cash position, we deemed it appropriate to return value to our shareholders.

General Motors (NYSE:GM) Has Affirmed Its Dividend Of $0.09

On the 14th of December, General Motors Company (NYSE: GM) is set to distribute a dividend of $0.09. This equates to an annual payment constituting 1.2% of the current stock price, which falls below the industry average.

General Motors’ dividend, prior to this announcement, demonstrated strong coverage from both cash flow and earnings. A substantial portion of its earnings was reinvested back into the business, showcasing a sustainable payout.

Despite the lower dividend yield, it remains attractive when considering its predictability over an extended period. Looking ahead, the forecast indicates a 2.7% decline in earnings per share over the next year. However, based on recent trends, the estimated payout ratio is 4.6%, suggesting the company has ample capacity to sustain its dividend in the future.

While General Motors has a lengthy dividend track record, there have been instances of cuts in the past. Over the years, the dividend has decreased from an annual total of $1.20 in 2013 to the most recent annual payment of $0.36, marking a substantial 70% decline. The reduction in dividend payments raises concerns as it may signify challenges the company is encountering.

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