General Motors Corporation (GM)

Discount cash flow analysis

Sell Overvalued by 66.9%

5% margin of safety What's this?

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How does this work?

This is an interactive analyst report for General Motors Corporation, based on a discounted cash flow valuation approach.

You can modify the assumptions and the valuation will be updated automatically. You can also save and share your valuation.

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Values in $ millions
2007 2008 2009 2010 2011 2012 2013 2014
 
                 
               
 

What will the revenues be in the future?

Growth beyond year three is driven by the terminal growth rate.

Price history

Sensitivity matrix

   
-1%
Discount Rate %
0%

1%
  -1% $10.84 $10.34 $9.86
Terminal Growth% 0 $10.99 $10.49 $10.00
  +1% $11.14 $10.64 $10.14

How does a change in discount rate or terminal growth affect valuation?

This table shows the sensitivity of the valuation to two key variables - the discount rate and the terminal growth rate

Valuations and comments

  • Valuecruncher created a new valuation of $0.00 (overvalued by 100.0%) - 12 months ago
  • collinjones20 created a new valuation of $0.00 (overvalued by 100.0%) - over 7 years ago
  • pferg created a new valuation of $0.00 (overvalued by 100.0%) - over 8 years ago
  • pferg created a new valuation of $0.00 (overvalued by 100.0%) - over 8 years ago
  • pferg created a new valuation of $0.00 (overvalued by 100.0%) - over 8 years ago
  • pferg created a new valuation of $0.00 (overvalued by 100.0%) - over 8 years ago
  • zxchux created a new valuation of $0.00 (overvalued by 100.0%) - over 8 years ago
  • dunkart created a new valuation of $0.00 (overvalued by 100.0%) - over 8 years ago
  • dunkart created a new valuation of $9.33 (undervalued by 479.5%) - over 8 years ago
  • aspinella created a new valuation of $2.69 (undervalued by 28.1%) - over 8 years ago
  • aspinella created a new valuation of $2.69 (undervalued by 28.1%) - over 8 years ago
  • SethWellbourne created a new valuation of $13.78 (undervalued by 410.37%) - over 8 years ago
  • GordonGekko created a new valuation of $1.77 (undervalued by 5.36%) - over 8 years ago
  • GordonGekko created a new valuation of $4.71 (overvalued by 1.05%) - almost 9 years ago
  • TheCrunchBlog created a new valuation of $10.49 (overvalued by 9.18%) - over 9 years ago
  • GordonGekko created a new valuation of $13.99 (undervalued by 9.21%) - over 9 years ago
  • Sam created a new valuation of $16.28 (overvalued by 23.46%) - over 9 years ago

Comments

Valuing General Motors (GM) – beyond the 53-year low

This valuation is part of this blog post:

http://blog.valuecruncher.com/2008/06/valuing-general-motors-beyond-the-53-year-low/

GM’s revenues decreased from US$195.3 billion in 2004 to US$181.1 billion in 2007 – a (2.5%) compound annual growth rate. Our assumptions of revenues for the next three years are US$173.75 billion in 2008 growing to US$190.25 billion in 2010 – a 4.6% compound annual growth rate (2008-10). We have projected EBITDA margins of 4.5% in 2008 then a flat 5.5% moving forward. We have used a terminal growth rate of 3%. We calculated this terminal growth rate based on year three growth of 3.5% dropping to a 3% stable growth rate by year 10. Our view is that this growth is coming from outside the US market – GM has approximately 60% of sales from international (i.e. non-US) markets. We used a terminal capital expenditure number of US$8.5 billion. We have used a WACC (discount rate) of 9.5%.

By TheCrunchBlog, about 9 years ago

The boring details

All amounts in millions Figures
Enterprise Value: 37,225
Net Debt (Long-term borrowings less cash): 19,307
Equity Value: 6,539
Number of Shares Outstanding: 566,000,000
Calculated value per share: $10.49

Enterprise Value is the present value of the post-tax cash flows for a business into the future.


Calcuation of EV

Where:

  • C1, C2, C3 - the cash flow in period 1, 2, 3, ...
  • r - the discount rate

To capture the cash flows into the future a terminal value is calculated via a perpetuity calculation -
based on the final years forecast post-tax free cash flow.


Perpetuity

Where:

  • Cn - the cash flow in the final forecast period.
  • LTG - the long-term growth rate
  • r - the discount rate
  • g - the terminal growth rate

The Capital Asset Pricing Model (CAPM) is used to determine the equity component in the discount rate.


CAPM model

Where:

  • rt - the risk free rate
  • t - the tax rate
  • B - the beta of the company
  • MRP - the Market Risk Premium

Valuecruncher uses an estimate of Weighted Average Cost of Capital (WACC) to determine the discount rate in the calculation.