GM resumes stock buybacks, dividends

Yahoo Finance Live anchors discuss GM announcing the resumption of share buybacks and dividends.

Video Transcript

BRIAN SOZZI: All right, and before we go to break, we’re checking in on shares of General Motors in premarket trading after the company announced the reinstatement of quarterly cash dividends on the company’s common stock at a rate of $0.09 per share. The dividend had been suspended since April 2020. GM also announced the resumption of share buybacks and increased the capacity on their plan from $3.3 billion to $5 billion.

And Julie, I went back to just get a sense of the valuation on GM. And I’m sure it has caused some head scratching moments with CEO Mary Barra and her team. Forward price to earnings multiple in GM 5.5 times. That is just paltry.

You look at price to sales, and I know it seems very boring but it’s important when you’re trying to figure out a valuation in a company, about 0.4. I mean, normally, you want to see companies that are price to sales ratio of 1.

So GM coming out here and sending a clear signal to the market, guys, we’re coming out with a lot of electric cars. We’re probably gonna make a lot of money over the next decade. We’re gonna buy back our stock now.

JULIE HYMAN: Yeah, and the market is not really receiving that.

BRIAN SOZZI: Yeah, it just–

JULIE HYMAN: Right? I mean, if you look–

BRIAN SOZZI: It tells you. It says a lot.

JULIE HYMAN: Right, yeah. I mean, if you look at the– and not just that. If you look at the reaction this morning in the premarket to this news, we’re giving you money back.


JULIE HYMAN: People are not so excited.

BRIAN SOZZI: I think it boils down to this, Julie. Just like the market thinks GM is gonna have to invest billions and billions of dollars, perhaps more than they think, in rolling out electric cars. And that’s gonna hurt the business.

JULIE HYMAN: Well, and not only that, also, I think that where we are on the adoption curve raises some questions, too. That there are all these big plans for the industry. And there are questions about the demand at this stage for electric versus gas powered cars.

BRIAN SOZZI: For what it’s worth, you’re gonna have to pull my gas-powered car out of my cold dead hands. I’m going– I’m going– I’m going– I need it. I need a car.

JULIE HYMAN: You can buy a second. You can buy a second.

BRIAN SOZZI: Yeah, I’m gonna have to. I’m not going–