General Motors Company (GM): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
General Motors recorded adjusted earnings of $2 billion or $1.19 per share in the fourth quarter of 2014, beating the Zacks Consensus Estimate of $0.85. Revenues fell 2.2% to $39.6 billion, missing the Zacks Consensus Estimate of $40 billion. GM will increase its second quarter dividend by 20% to $0.36 per share based on strong and sustained results. The company is positioned to benefit from its focus on the emerging markets and its investments in U.S to strengthen its operations and efforts to boost sales through product launches. However, we are concerned about the high number of product recalls and the challenging situation in South Africa. Thus, we are maintaining a Neutral recommendation on General Motors.


Overview:

Detroit, MI-based General Motors Company or GM, originally incorporated in 1908, is a leading global automotive company. Due to unfavorable economic conditions and a rapid decline in sales, the company filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code on Jun 1, 2009. Pursuant to this, the New GM was formed by acquiring most of the assets and assuming certain liabilities of the Old GM, and some of its direct and indirect subsidiaries.

GM received $52 billion in U.S. Treasury loans by selling 61% ownership stake of the company and C$1.5 billion ($1.5 billion) in Export Development Canada loans during the bankruptcy protection. In Dec 2013, the U.S. Department of Treasury completed the divestment of its entire stake in General Motors, recovered a total of $39 billion and incurred a loss of $10.5 billion. Another $826 million was lost due to the write-off of administrative claims against the company in Apr 2014, taking the total loss to $11.2 billion.

GM has its business presence in almost 120 countries. The company employed 212,000 personnel in its offices and facilities located in more than 30 countries as of Dec 31, 2013. It has 71 assembly facilities worldwide, 87 additional global manufacturing facilities as well as a global network of over 21,700 independent dealers.

GM, along with its strategic partners, produces, sells and services cars, trucks and parts under four core brands Chevrolet, Buick, GMC and Cadillac. In addition, GM assembles passenger cars, crossover vehicles, light trucks, sport utility vehicles (SUVs), vans and other vehicles.

GM has five operating segments, namely, General Motors North America ("GMNA"), General Motors International Operations ("GMIO ), General Motors Europe ("GME ), GM South America ("GMSA") and GM Financial. In the nine months ended Sep 30, 2014, 70% of the company's retail vehicle sales volume was generated outside the U.S. The company's key competitors include Chrysler Group LLC, Ford Motor Company, Honda Motor Company, Nissan Motor Company and Toyota Motor Corporation.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




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