Cathryn buys GM 31.73: However, a higher dividend could also lead to higher share price, allowing for more gains for the warrants.

The Class B Warrants would also underperform the shares if the share price were to stagnate, as both the time premium and dividends would be lost. Additionally, the company's large China presence provides the growth of an emerging market, but also brings the risk of a slowing Chinese economy. During the same time, the common shares would gain 72%. But the common shares will also have access to GM's sizeable dividend. At the $51.52 share price, the warrants would be worth $33.19, providing a 151% total return based on the current warrant trading price. Of course, this estimate has too many significant figures, but it can be used to approximate a general range for the share price if earnings grow as expected.


Esperanza:
To be conservative, I am discounting the 2018 estimate by 10% to $6.44, which also reflects a modest year-over-year EPS gain compared to the 2017 est.

Georgina:
This estimate is about $1.20 higher than the 2017 est.

Samantha:
Based on Nasdaq data, there is only one 2018 EPS estimate for GM coming in at $7.16 for the year.

Holly:
This represents a wide discount to market averages as well as a slight discount to the current TTM EPS valuation.

Ronna:
While some GM bulls undoubtedly have higher valuation targets, I will use an 8.0x prior-year EPS valuation.

Yu:
Valuing the warrants versus the common stock involves estimating the share price at the July 2019 expiration.

Kimberley:
While future liability expenses cannot be ruled out, putting larger 2015 and 2016 EPS figures in the books could go a long way towards demonstrating GM's earnings power.

Tasha:
Earnings results for 2014 were clouded with one-time recall-related costs, leading to lower EPS numbers.

Sheba:
The market may also be taking a wait-and-see approach as it waits for GM's higher EPS to actually materialize.

Charline:
In fact, according to data from Yahoo Finance, EPS estimates are marginally higher now than they were before the market downturn.

General Motors Company (NYSE:GM)
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