We asked GM's CFO why it doesn't break out its EV business: Morning Brief
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It’s New York City auto week and that could mean only one thing to the group of journalists here at Yahoo Finance.
Impactful meetings with top auto execs (and coverage at the event on Yahoo Finance Live)! What, you thought I was going to say amazing pics of EVs for Instagram?
To that end, yours truly and our senior auto correspondent Pras Subramanian had the opportunity to eat lunch (steak, if you must know) with GM CFO Paul Jacobson (he had the cobb salad) fresh off his widely followed Bank of America presentation in the morning.
It’s there Jacobson further detailed news earlier in the day of 5,000 white-collar workers taking buyouts — a move that will save GM about $1 billion in costs.
All of this is in line to what Jacobson told me several weeks ago on a fresh round of cost-cuts at the auto giant.
I found Jacobson, as usual, to be highly knowledgeable about his business, perhaps one of the most knowledgeable CFOs I have gotten to know in the past year. To that end, I put this thread to Jacobson and was a little surprised by the response.
“We are a show me story,” Jacobson said, when asked why GM’s stock trades on a mere forward price-to-earnings multiple of 5.4 times despite a stretch of impressive quarters and bullish forward demand comments (which Jacobson reiterated at the lunch). I then followed up on if an “unlock” of the multiple would be possible if GM broke out the financials of its budding EV unit.
He then explained that unlike rival Ford, GM will not be splitting its EV business from its internal combustion engine business. Some top investors want to see it, Jacobson told me, others not so.
Jacobson believes it’s more important for GM to drive overall efficiencies from the business rather than go through an accounting exercise.
Fascinating philosophical difference between two auto legends trying to track down the rich profit margins over at Tesla. Only time will tell which stock gets rewarded first in their EV efforts.
Final fun fact: Jacobson is the new owner of a Camaro ZL1 and an electric Hummer (reviewed by Pras here), which he told us proudly he paid full stick price for. Love the focus on profit margins by the CFO!
— Brian Sozzi, Executive Editor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
What we're watching
8:15 a.m. ADP Employment numbers: The Street expects a slower month of job growth compared to February with expectations that 200,000 new jobs were added to the private sector. ADP's numbers come two days ahead of Friday jobs report, so the market will be watching for surprises.
10 a.m. ISM Services: We got manufacturing data earlier this week from the ISM that was the lowest in quite some time. As Myles Udland indicated in the Brief yesterday, manufacturing is just one part of the economy. We'll get another piece of the puzzle this morning.
8 a.m. Walmart analyst day 2: The country's largest retailer will continue presentations on its business. Investors will look for precious guidance on retail, consumer appetites, logistics, and other nuggets
Follow all the action throughout the day on the Yahoo Finance Markets Blog
What we're reading
Job opening data shows signs of the 'better balance' Powell, Fed have been seeking: For the first time in over two years, there are fewer than 10 million jobs open. The Fed thinks this is terrific.
Gas prices could head toward $4 per gallon: You can thank OPEC for this one. We're at $3.51 now on average in the U.S., and while prices are expected to go up, gas shouldn't hit the $5 per gallon seen last summer.
Housing expert: 'Mortgage rates are becoming much better': Mortgage rates fell for the third straight week last week to an average of 6.32%. Reminder: rates were at 4.67% a year ago.
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