Is General Motors Company (GM) overvalued?
On Equity Rank's model estimate, GM trades 10% above its fair value. General Motors Company (GM) last closed at $86.16; the multi-method model fair value is $77.96.
| Price | Model fair value | Price vs model |
|---|---|---|
| $86.16 | $77.96 | 11% above |
What the answer rests on
- 3 of 11 valuation methods put GM's value above its price and 8 put it below, so the methods disagree.
- To justify today's price, GM's free cash flow would need to grow about -5.3% a year for ten years (a reverse discounted cash flow).
- GM trades at 20.2 times its last year's earnings, against a median of 18.3 for 21 profitable Automotive companies.
- Over the past year the price sat below the model fair value on 1% of trading days. The gap ranged from 4% below to 52% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind GM's fair value · What prices assume · Other companies