Skip to Content
Morningstar

GM Ends 2021 With Adjusted Automotive Free Cash Flow Up

GM’s fourth quarter showed robust adjusted auto free cash flow of $6.4 billion and adjusted diluted EPS of $1.35 beat the $1.19 Refinitiv consensus. We are not changing our fair value estimate.

GM’s GM fourth quarter showed robust adjusted auto free cash flow of $6.4 billion and adjusted diluted EPS of $1.35 beat the $1.19 Refinitiv consensus. We are not changing our fair value estimate but will update our modeling assumptions after GM’s 10-K is filed. 2022 guidance looks like solid numbers, should GM achieve them, with adjusted diluted EPS at $6.25-$7.25 and total company adjusted EBIT of $13 billion to $15 billion. Full-year 2021 respective figures were $7.07 and $14.3 billion. The EPS guide at its midpoint is below Refinitiv consensus of $6.92 and the $1 EPS range is due to continued uncertainty around the chip shortage and commodity costs. Management remains optimistic that most chip shortage problems will be resolved by the third quarter which we think is a reasonable prediction.

We see the key uncertainty for the market as will management’s expectation of 25%-30% global wholesale unit growth be realized as we’ve heard suppliers recently continue to express pessimism about current industry forecasts. GM, however, feels their chip supply continues to improve. The incremental earnings boost from this volume will not be as great as one may expect, however, because in 2021 GM prioritized pickup and SUV production, so most incremental 2022 volume will be in lower profit contribution vehicles, such as midsize sedans and small crossovers. An expected approximate $2.5 billion in higher commodity and logistics costs will be a headwind as will the Cruise autonomous vehicle unit hiring 500 people as it begins to scale up commercial operations.

CEO Mary Barra also said the dividend will not be resumed at this time but GM will consider all opportunities to return cash to shareholders. Management has had two high profile opportunities since October to say the dividend will eventually resume but has not committed to resuming it. We maintain our prediction that GM will not resume a regular dividend but may do special dividends as a way to attract more growth investors.

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

More in Stocks

About the Author

David Whiston

Strategist, Equity Analysis
More from Author

David Whiston, CFA, CPA, CFE, is a strategist for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He covers the automotive industry, including dealerships, parts manufacturers, and automakers. He has covered the automotive industry since joining Morningstar in 2007.

Before Morningstar, Whiston spent four years in PricewaterhouseCoopers’ New York real estate audit practice and one year in its Chicago office working on real estate acquisition due diligence.

Whiston holds a bachelor’s degree in business administration with a concentration in accounting from the University of Richmond. He also holds a master’s degree in business administration with concentrations in finance, economics, and organizational behavior from the University of Chicago Booth School of Business. He holds the Chartered Financial Analyst® designation, and he is a Certified Public Accountant and a Certified Fraud Examiner. In 2012, he ranked first in the specialty retailers and services industry in The Wall Street Journal’s annual “Best on the Street” analysts survey. He ranked first in the same industry in 2011.

Sponsor Center