Why This Automaker Is Still So Cheap

The following video is part of our "Motley Fool Conversations" series, in which industrials editor/analyst Brendan Byrnes and consumer goods editor/analyst Austin Smith discuss topics across the investing world.

In today's edition, Brendan and Austin discuss recent earnings from General Motors; in particular, why the company's stock remains so cheap. One of the main reasons is GM's exposure to Europe, where the company has lost over $15 billion since 1999. Investors have been hoping to hear GM's plans for turning around in Europe, a problem mainly due to an overcapacity problem and the continent's struggling economies. The fact that the U.S. government still owns over 30% of GM's common shares could be another factor helping keep the share price low, not to mention the company's $20 billion-plus pension obligations. Having said that, the stock is dirt cheap at under five times earnings. Is that justified, or does GM rate as a buy?

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