Updated Research Report on General Motors - Analyst Blog
March 31 2014 - 10:20AM
Zacks
On Mar 2, 2014, we issued an updated research report on
General Motors Company (GM). General Motors
benefits from its focus on the emerging markets, investments in
North America and efforts to boost financial flexibility. We also
appreciate its focus on the fuel cell technology.
However, we are concerned about its significant exposure to
Europe, rising debt and declining free cash flow. Additionally,
high product recalls and the ongoing investigation regarding delay
in product recalls are reasons for concern.
General Motors recorded adjusted earnings of $1.1 billion or 67
cents per share in the fourth quarter of 2013, lagging the Zacks
Consensus Estimate of 88 cents per share. In comparison, the
company generated earnings of $0.8 billion or 48 cents per share in
the fourth quarter of 2012.
Revenues in the quarter grew 3.1% year over year to $40.5
billion, lagging the Zacks Consensus Estimate of $40.8 billion. In
2013, General Motors was the leading automaker with a 16.9% market
share in the U.S. GM is focusing on the emerging markets,
particularly Brazil, China and India, to recoup its global sales by
increasing capacity investment to meet the growing demand.
However, General Motors has been facing heat for delaying the
recall of 1.6 million vehicles with defective ignition switches
which can lead to shutting down of the engine and prevent
deployment of front air bags in the event of a crash.
GM’s total debt (Automotive and Financial) increased
significantly to $36.2 billion as of Dec 31, 2013 from $16.1
billion as of Dec 31, 2012. Consequently, debt-to-capitalization
ratio increased to 45.9% as of Dec 31, 2013 from 30.7% at the end
of 2012.
General Motors reported positive earnings surprises in 3 of the
trailing 4 quarters with an average beat of 2.95%. The Zacks
Consensus Estimate for the company’s 2014 earnings per share stands
at $3.77, up 18.52% from 2013.
General Motors currently holds a Zacks Rank #4 (Sell). Some
better-ranked automobile stocks worth considering are Tata
Motors Limited (TTM), Daimler AG (DDAIF)
and Tesla Motors, Inc. (TSLA). Tata Motors and
Dailmer sport a Zacks Rank #1 (Strong Buy), while Telsa carries a
Zacks Rank #2 (Buy).
DAIMLER AG (DDAIF): Get Free Report
GENERAL MOTORS (GM): Free Stock Analysis Report
TESLA MOTORS (TSLA): Free Stock Analysis Report
TATA MOTORS-ADR (TTM): Free Stock Analysis Report
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