Q3 Preview: One Year After IPO, GM (GM) Still Fighting Uphill Battle

By
A A A

General Motors Co. ( GM ) shares are moving higher Tuesday afternoon heading into its third-quarter earnings report, expected out before the market opens Wednesday.

The Street is looking for GM to report earnings of 96 cents per share on revenue of $36.66 billion. GM posted earnings of $1.54 reported last quarter, and $1.20 for the same period last year.

Through the quarter, shares moved 33.5 percent lower to $20.18. Shares are 23.5 percent better since the end of the quarter, but 32 percent lower in 2011. GM has traded in a range of $19.05 to $39.48 over the last 52-week time frame.

Last quarter, GM reported a book value of $20.47 per share and cash of $20.98 per share. From a valuation standpoint, GM is going for about 5.8x next years earnings, compared with 7x for Ford Motor ( F ) and 14.3x for Toyota ( TM ).

Data from Bloomberg has 16 analysts with a Buy on the stock, five at Hold, and none suggesting to Sell. The Street price target average is $37.50, with a low of $24 and high of $43.

U.S. auto sales through the quarter: 7.6 percent risen in July, 18 percent in August, and 20 percent in September. Investors might want to heed some caution, however, as October sales saw just a 1.7 percent increase.

On the other hand, reports Tuesday suggest CEO Dan Akerson is aiming to improve GM's margins significantly through cost cuts, amid some of the best financial reporting GM has produced in over 20 years. With 6 percent margins, one analyst commented, GM leads only Toyota, Renault SA and PSA Peugeot Citroen. Peers Ford and Volkswagen boast margins at 7 percent or better.

One way GM plans to do this is reducing the number of vehicle architectures. From 30 designs right now, GM would like that to move closer to 14 by 2018 through the building of more high-volume vehicles with the same frame. Also, GM hopes to reduce the number of engines used in its vehicles. It cut that number from 20 to 16 in 2009, and would like to hit just 10 by 2018.



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.



This article appears in: Investing , Stocks

Referenced Stocks: F , GM , TM

StreetInsider.com

StreetInsider.com

More from StreetInsider.com:

Related Videos

Stocks

Referenced

84%
60%
79%

Most Active by Volume

183,639,073
  • $42.32 ▲ 3.85%
82,623,623
  • $15.99 ▼ 22.79%
39,547,942
  • $119 ▲ 1.19%
32,107,751
  • $77.62 ▲ 2.63%
29,684,848
  • $10.60 ▲ 2.02%
27,615,309
  • $24.03 ▲ 0.38%
26,917,669
  • $31.10 ▲ 2.07%
26,464,306
  • $47.75 ▲ 0.59%
As of 11/26/2014, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com