DETROIT - General Motors Co. (NYSE: NYSE:GM) has received approval from its Board of Directors for a new share repurchase program, authorizing up to $6 billion of its outstanding common stock. This latest financial move follows a series of share buybacks and dividend increases, underscoring the automotive giant's commitment to returning value to its shareholders.
The company's executive vice president and chief financial officer, Paul Jacobson, highlighted the consistent revenue growth, margins, and free cash flow resulting from GM's investment in its brands and product portfolio. Jacobson emphasized the company's focus on the profitability of its internal combustion engine (ICE (NYSE:ICE)) business and the growing profitability of its electric vehicle (EV) operations.
General Motors had previously announced a $10 billion accelerated share repurchase in November 2023, with around $1.4 billion still available under the prior authorization. During the first quarter of 2024, GM repurchased $0.3 billion in shares and anticipates utilizing the remaining $1.1 billion before the end of the second quarter. The new authorization will enable further share repurchases upon the completion of the existing program.
In the first quarter, GM also raised its common stock dividend by 33%, from $0.09 to $0.12 per share. Shareholder returns have been a priority for the company, with substantial amounts allocated to share repurchases and dividends over the past few years.
The table below illustrates GM's shareholder returns over the recent years:
- In 2022, GM repurchased $2.5 billion in shares and paid out $0.3 billion in dividends, totaling $2.8 billion in shareholder returns.
- The following year, 2023, saw an increase with $11.11 billion in share repurchases, including the full $10 billion accelerated share repurchase, and $0.5 billion in dividends, summing up to $11.6 billion in returns.
- For the first half of 2024, GM has estimated shareholder returns to reach $1.72 billion, combining $1.4 billion in repurchases and $0.32 billion in dividends.
General Motors is set to report its second-quarter financial results on July 23, 2024. The company, known for its extensive range of brands including Chevrolet, Buick, GMC, Cadillac, Baojun, and Wuling, is advancing towards an all-electric future, with its Ultium battery platform at the core of this strategy.
This article is based on a press release statement from General Motors.
In other recent news, General Motors (GM) is set to face significantly reduced penalties due to relaxed fuel economy standards announced by the National Highway Traffic Safety Administration (NHTSA). The new rules, which aim for an average of 50.4 miles per gallon by 2031, are expected to result in total industry fines of $1.83 billion or potentially less, a significant decrease from the previously projected $14 billion. For GM, this translates to an estimated $906 million in penalties, down from the initially proposed $6.5 billion.
GM's CEO, Mary Barra, recently expressed the company's commitment to the development of autonomous vehicle technology, highlighting its potential for enhancing road safety by reducing human error. Meanwhile, GM Defense, a subsidiary of GM, has partnered with Mistral Inc. to integrate advanced loitering munition technology into its light tactical utility vehicle, demonstrating the company's dedication to innovative solutions in the defense sector.
Furthermore, GM, alongside other major automakers, has shown support for the U.S. Environmental Protection Agency's new vehicle emissions regulations, specifically the inclusion of electric vehicles in fleetwide emissions averaging and the exclusion of upstream emissions from compliance calculations.
InvestingPro Insights
General Motors Co. (NYSE: GM) is demonstrating a firm commitment to shareholder value, as evidenced by their new share repurchase program and dividend increases. This strategy is reflected in several key metrics and insights from InvestingPro. With a market capitalization of $54.25 billion and a notably low P/E ratio of 5.85, GM is trading at attractive earnings multiples. The adjusted P/E ratio for the last twelve months as of Q1 2024 stands even lower at 5.08, indicating a potentially undervalued stock according to traditional valuation measures.
InvestingPro Tips highlight that GM's management has been aggressively buying back shares, a sign of confidence in the company's financial health and future prospects. Additionally, the company is trading at a low P/E ratio relative to near-term earnings growth, suggesting that its stock price may not fully reflect its growth potential. With a strong free cash flow yield implied by its valuation, GM appears to be in a robust financial position to continue its shareholder return programs.
The company's revenue has grown by 8.79% over the last twelve months as of Q1 2024, with a gross profit of $20.05 billion and a gross profit margin of 11.47%. These figures underscore GM's solid performance and its ability to generate income from its operations. Moreover, GM's stock has experienced a large price uptick over the last six months, with a 42.46% total return, which aligns with the InvestingPro Tip pointing out a strong return over the last three months.
For readers interested in a deeper analysis, there are additional InvestingPro Tips available that could provide further insights into GM's financial health and market position. To explore these tips and take advantage of the wealth of information available on InvestingPro, make sure to use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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