General Motors Chairman and CEO Mary Barra had a big message for investors on Wednesday.
The auto giant’s shares are undervalued amid the outlook Profitable Electric cars are rolling out of the factories, and it’s time to buy… just as GM is about to do.
The automaker today unveiled a new $10 billion stock buyback plan, achieving a 33% increase in profits.
GM shares rose nearly 10% during the session.
“It demonstrates our confidence in our strategy and our ability to grow and generate cash flow as well as strong margins,” Barra said of the maneuvers on Yahoo Finance Live (video above).
Barra reiterated GM’s plan to achieve a low-single-digit profit margin on its electric vehicle operations by the end of 2025, and to produce mostly electric vehicles by 2035.
“Personally, I’m not happy with the stock price,” Barra added.
Before today’s announcement, GM shares had fallen about 20% in the past year, compared with a 15% gain for the S&P 500 (^GSPC).
Investors have expressed concern about several aspects of GM’s investment thesis this year. Concerns ranged from sluggish demand for electric vehicles and rising interest rates that have plagued the public’s auto-buying outlook to rising costs under the new deal with the United Auto Workers (UAW).
Under the new UAW contract, wages are expected to rise by 25%. GM said today it will realize some cost savings to help offset higher labor costs.
Meanwhile, the company is taking a more cautious view on 2023 earnings.
The company expects net profits in 2023 to reach $9.1 billion to $9.3 billion, down from $9.3 billion to $10.7 billion previously.
“Today’s update should address uncertainty related to the UAW and lift investor confidence on the back of an accelerated buyback process and 2024 comments,” Citi analyst Itai Michaeli said in a note to clients.
Brian Susie He is the executive editor of Yahoo Finance. Follow Susie on Twitter @Brian Susie and on LinkedIn. Advice on deals, mergers, activist positions, or anything else? Email brian.sozzi@yahoofinance.com.
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