On Feb 18, we maintained our Neutral recommendation on
General Motors Company
) despite its lower-than-expected fourth quarter earnings and
fall in yearly profits based on anticipated gain from the
company's major expansion plan across the globe and its recent
move to improve its brand image.
GM posted a 23.1% rise in profits to 48 cents per share in the
fourth quarter of 2012 but missed the Zacks Consensus Estimate by
a penny. Revenues increased 3.4% to $39.3 billion, which was
higher than the Zacks Consensus Estimate of $38.6 billion.
For full year 2012, GM posted a 16.5% fall in profits to $3.24
per share, which was in line with the Zacks Consensus Estimate.
Revenue increased marginally by 1.3% to $152.3 billion in the
Following the release of fourth quarter results, the Zacks
Consensus Estimate for 2013 dipped 3.1% to $3.73 per share. The
Zacks Consensus Estimate for 2014 also fell 3.6% to $4.87. The
company now has a Zacks #3 Rank (Hold).
GM expects to benefit from its continued focus on emerging
markets, particularly in Asia. The leading global automotive
company announced plans to expand its dealerships in Indonesia
and Thailand. It also opened a plant in China through its joint
venture SAIC-GM-Wuling and upped stake in its Indian joint
venture with Shanghai Automotive Industry Corporation (SAIC).
Further, GM is very close to shedding its "Government Motors" tag
as it announced plans to repurchase 200 million shares from the
U.S. government for $5.5 billion. Post-sale, the stake of U.S.
Treasury in the company will be reduced to 19% from 26.5%.
However, the ongoing financial crisis in Europe expects to
continue to mar the company's results. Its European operations
saw a loss of $1.8 billion in 2012, which is more than double
from $747 million in the prior year.
Other Stocks to Look For
Few stocks that are performing well in the industry where GM
) with Zacks Rank #1 (Strong Buy) and
) with Zacks Rank #2 (Buy).
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