1 / 20

General motors

General motors. Module 3: Market Multiple Valuation. Enterprise operations. General Motors. Client Strategy Template: General Motors . Strategies.

bevan
Download Presentation

General motors

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. General motors Module 3: Market Multiple Valuation

  2. Enterprise operations General Motors

  3. Client Strategy Template: General Motors Strategies Growth Strategy:Focus on “alternative propulsion strategies” (hybrid, electric, FlexFuel, hydrogen fuel cell) in an attempt to create environmental diversity and fuel efficiency throughout product line Financial Goals & Operating Priorities:Aim to be the industry leader in fuel efficiency, pursue top market share in both domestic and global market Characteristics of the Business Major Business Units: GMNA, GME, GMIO, GMSA, GM Financial Markets: Automotive assembly and manufacturing, financial services (leases, contracts), automotive safety technology Products: Chevrolet, GMC, Buick, Cadillac, OnStar technology, GM Financial services Customers: Auto wholesalers, Rental car agencies, Authorized dealerships Competitors:Toyota, Ford, Nissan Strategic Alliances/Joint Ventures: Mostly concentrated in China Potential Adverse Influences: Constant technology innovation, oil prices, raw material prices, government regulation, dependence on suppliers, product recalls (safety issues)

  4. Markets & products • Auto brands • Chevrolet • GMC • Buick • Cadillac • OnStar (wholly owned sub) • GM Financial • Formerly AmeriCredit Corp • Strategic Alliances • Concentrated in China • JV with SAIC Motor

  5. Reformulation General Motors

  6. EPAT

  7. NFL

  8. NEA

  9. Market multiples General Motors

  10. Step 1: Select summary performance Measure • Enterprise Performance Measures • EPAT • NEA • Equity Performance Measures • Price minus Book Value to R&D • Price minus Book Value to Advertising

  11. Step 2:Select comparable companies • GM • Ford • Toyota • Honda • Are they actually comparable?

  12. Step 3:Compute market multiple Example: Current Market Price per Share X Common Shares Outstanding Market Cap Market Cap + NFL = Enterprise Value Enterprise Value/EPAT = EPAT multiple

  13. Step 3:Compute market multiple Example: Current Market Price per Share X Common Shares Outstanding Market Cap Total SH Equity – preferred – noncontrolling interests Book Value Equity (Market Cap-BV)/RD = Multiple

  14. Step 4:Compute GM’s value using performance measure and market multiple • EPAT Multiple • Enterprise performance measure • Subtract value owed to debt holders (NFL) to get equity value

  15. Step 4:Compute GM’s value using performance measure and market multiple • NEA Multiple • Enterprise performance measure • Subtract value owed to debt holders (NFL) to get equity value

  16. Step 4:Compute GM’s value using performance measure and market multiple • Price Minus BV to R&D Multiple • Enterprise performance measure • Not necessary to subtract value owed to debt holders (NFL) • Just divide by common shares

  17. Step 4:Compute GM’s value using performance measure and market multiple • Price Minus BV to Advertising Multiple • Enterprise performance measure • Not necessary to subtract value owed to debt holders (NFL) • Just divide by common shares

  18. Step 5: Buy, sell, or hold?

  19. Confidence level • Method of comparables • Extremely difficult in reality • Foreign competitors • Financing portion of auto industry • Influence of bankruptcy • Year-end differences • Which stock price should determine market value? • Prevalence of outliers • Unable to find a single metric that lacked outliers • Highly subjective • Role of judgment, estimates

  20. Questions?

More Related