Reviewing General Motors (GM) and Ferrari (RACE)

General Motors (NYSE: GM) and Ferrari (NYSE:RACE) are both large-cap auto/tires/trucks companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, risk, valuation, profitability, earnings, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a breakdown of current ratings and price targets for General Motors and Ferrari, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
General Motors 2 8 11 0 2.43
Ferrari 1 3 4 0 2.38

General Motors presently has a consensus price target of $47.84, suggesting a potential upside of 18.07%. Ferrari has a consensus price target of $132.00, suggesting a potential downside of 2.26%. Given General Motors’ stronger consensus rating and higher possible upside, analysts plainly believe General Motors is more favorable than Ferrari.

Profitability

This table compares General Motors and Ferrari’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
General Motors -3.76% 23.03% 4.11%
Ferrari 16.44% 79.32% 13.77%

Valuation and Earnings

This table compares General Motors and Ferrari’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
General Motors $145.59 billion 0.39 -$3.86 billion $6.62 6.12
Ferrari $3.86 billion 6.61 $605.15 million $3.19 42.34

Ferrari has lower revenue, but higher earnings than General Motors. General Motors is trading at a lower price-to-earnings ratio than Ferrari, indicating that it is currently the more affordable of the two stocks.

Dividends

General Motors pays an annual dividend of $1.52 per share and has a dividend yield of 3.8%. Ferrari does not pay a dividend. General Motors pays out 23.0% of its earnings in the form of a dividend.

Risk & Volatility

General Motors has a beta of 1.63, indicating that its share price is 63% more volatile than the S&P 500. Comparatively, Ferrari has a beta of 1.4, indicating that its share price is 40% more volatile than the S&P 500.

Insider and Institutional Ownership

73.3% of General Motors shares are owned by institutional investors. Comparatively, 32.2% of Ferrari shares are owned by institutional investors. 0.4% of General Motors shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

General Motors beats Ferrari on 9 of the 16 factors compared between the two stocks.

General Motors Company Profile

General Motors Company, together with its subsidiaries, designs, builds, and sells cars, trucks, crossovers, and automobile parts worldwide. The company operates through GM North America, GM International, and GM Financial segments. It markets its vehicles primarily under the Buick, Cadillac, Chevrolet, GMC, Holden, Baojun, Jiefang, and Wuling brand names. The company also sells cars, trucks, and crossovers to dealers for consumer retail sales, as well as to fleet customers, including daily rental car companies, commercial fleet customers, leasing companies, and governments. In addition, it offers connected safety, security, and mobility solutions, as well as information technology services. Further, the company provides automotive financing services. General Motors Company was founded in 1897 and is based in Detroit, Michigan.

Ferrari Company Profile

Ferrari N.V., through with its subsidiaries, designs, engineers, produces, and sells luxury performance sports cars. The company offers sports cars, GT cars, special series cars, limited edition supercars, limited editions series, and one-off cars; and open air roadsters and two-seater mid-rear-engined roadsters. It also provides non-registered racing cars; and parts, as well as after sales, repair, maintenance, and restoration services for cars. In addition, the company licenses its Ferrari brand to various producers and retailers of luxury and lifestyle goods; and Ferrari World, a theme park in Abu Dhabi, the United Arab Emirates. Further, it offers non-registered racing cars; and parts, as well as after sales, repair, maintenance, and restoration services for cars. Additionally, the company provides direct or indirect finance and leasing services to retail clients and dealers; and manages race tracks, as well as owns and manages two museums in Maranello and Modena, Italy. As of December 31, 2017, it had a total of 48 retail Ferrari stores, including 30 franchised stores and 18 owned stores. The company also sells its products through a network of 164 authorized dealers operating 185 points of sale worldwide, as well as through its Website, store.ferrari.com. The company was founded in 1947 and is headquartered in Maranello, Italy.

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