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In the midst of an ongoing United Auto Workers strike that has been expanding each week, General Motors Co. (NYSE:) has managed to secure a $6 billion credit deal with 21 banks, including prominent financial institutions such as JPMorgan Chase (NYSE:) & Co. and Citibank N.A., a division of Citigroup Inc (NYSE:). This move comes as a response to the labor dispute that has led to thousands of layoffs at GM.
Under the terms of the deal, GM is required to maintain $4 billion in global liquidity and $2 billion in U.S. liquidity. The company reported a 21% increase in third-quarter vehicle sales on Wednesday, which aligns with the InvestingPro data that shows a 28.48% revenue growth in the last twelve months (LTM2023.Q2).
The company’s shares have seen an overall decrease of 7% this year, with a sizable debt of $12 billion due in 2023 contributing to investor concerns. The InvestingPro data supports this, showing a 3-month price total return of -19.24%. Yet, the company’s shares are trading at a low P/E ratio relative to near-term earnings growth, as indicated by an InvestingPro Tip. The P/E ratio stands at 4.26, which is considered low in the industry. This, coupled with the valuation that implies a strong free cash flow yield, suggests that the company’s shares might be undervalued.
Despite a slight dip in GM’s stock, which fell 0.3% on Wednesday, there’s a silver lining. According to InvestingPro data, GM’s adjusted market cap is 42.35B USD, and the company has managed to stay profitable over the last twelve months, as indicated by an InvestingPro Tip. Furthermore, the company’s strong earnings should allow management to continue dividend payments, which is a positive sign for investors. The dividend yield as of 2023 stands at 1.15%.
It’s important to note that GM is a prominent player in the Automobiles industry, and management has been aggressively buying back shares, as per an InvestingPro Tip. This indicates confidence in the company’s future prospects.
For those interested in more insights like these, InvestingPro offers a wealth of additional tips and real-time metrics. For instance, in the case of GM, there are ten more InvestingPro Tips available, providing a deeper understanding of the company’s financial health and market position.
The next earnings date for GM is set for 2023-10-24, which will provide further insights into the company’s performance amidst the ongoing labor unrest and other challenges. It’s worth monitoring GM’s performance closely, given its significant role in the Automobiles industry and the potential value its shares currently offer.
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