GM Reports Q1 Earnings: $856 Million PROFIT

[tropick]

thanks to the camaro!!!!!!!!!!!!!!

[Sevn86]

This is great news!

[UCI CamaroFan]

So let's see how the government's investment is coming along. (roughly)

First off, we need to see how many shares are outstanding from GM. From their quarterly report, it is 500,000,000. (500 million)

Of that, the government owns roughly 60%, yes? 60% of 500 million is 300 million. For these 300 million shares, the government paid 43.3 billion (50 billion total, subtract the 6.7 billion in loans repaid) That works out to $144.33 per share.

Now, let's say that GM just keeps up its current profit of 865 million per quarter. That means it's making 3.46 billion per year. Or, we can take the 1.73 earnings per share (non-diluted) and multiply by 4, and get 6.92 earnings for the year (given they keep going at the same rate).

So, 144.33 / 6.92 = 20.85. That is the PE ratio that the government paid for the common stock for GM.

20x earnings multiple is awfully high, especially for a company that just went bankrupt. Let's compare this PE ratio to Ford's... which is currently 8.88. This is much more realistic than the 20 that the government paid.

But, let's cut GM some slack, let's say that a earnings multiple of 10 is fair. Even then, that means the common stock should be priced at just under $70 a share. This is far below what the government paid for the common stock... meaning that the government would probably lose about 20 billion dollars if it sold its share of GM right now (by my calculations).

Anyways, this is just my fun little attempt at valuing GM and giving a scale with which to measure GM's performance. (no, my estimates aren't perfect)

[THE EVIL TW1N]

Originally Posted by UCI CamaroFan

So let's see how the government's investment is coming along. (roughly)

First off, we need to see how many shares are outstanding from GM. From their quarterly report, it is 500,000,000. (500 million)

Of that, the government owns roughly 60%, yes? 60% of 500 million is 300 million. For these 300 million shares, the government paid 43.3 billion (50 billion total, subtract the 6.7 billion in loans repaid) That works out to $144.33 per share.

Now, let's say that GM just keeps up its current profit of 865 million per quarter. That means it's making 3.46 billion per year. Or, we can take the 1.73 earnings per share (non-diluted) and multiply by 4, and get 6.92 earnings for the year (given they keep going at the same rate).

So, 144.33 / 6.92 = 20.85. That is the PE ratio that the government paid for the common stock for GM.

20x earnings multiple is awfully high, especially for a company that just went bankrupt. Let's compare this PE ratio to Ford's... which is currently 8.88. This is much more realistic than the 20 that the government paid.

But, let's cut GM some slack, let's say that a earnings multiple of 10 is fair. Even then, that means the common stock should be priced at just under $70 a share. This is far below what the government paid for the common stock... meaning that the government would probably lose about 20 billion dollars if it sold its share of GM right now (by my calculations).

Anyways, this is just my fun little attempt at valuing GM and giving a scale with which to measure GM's performance. (no, my estimates aren't perfect)

wow, hopefully GM can start making some huge strides to make this right.