Why General Motors (GM) Is Up Today

Tickers in this article: GM

NEW YORK (TheStreet) -- General Motors Co.  climbed 1% to $40.45 on Monday morning after the company's Chevrolet brand won the 2014 North American Car of the Year and North American Truck of the Year awards.

The Corvette Stingray sports car won the North American Car of the Year Award, while the Silverado pickup, the full-sized truck that is one of GM's most profitable autos, won the North American Truck of the Year at the Detroit auto show. GM had not won both awards since 2007, and Ford was the last company to sweep the awards in 2010 with the Transit Connect van and the Fusion sedan.

The Corvette Stingray defeated GM's Cadillac CTS and Mazda Motor Corp.'s Mazda3. The Silverado beat out Honda Motor Co.'s Acura MDX and Chrysler Group LLC's Jeep Cherokee.

Mary Barra, who takes over as CEO of GM on Jan. 15 after Dan Akerson retires, called the win "very significant," according to Bloomberg.

"I hope that people look, and if they haven't considered General Motors or Chevrolet they'll get into the showroom, because I'm confident if they get into the showroom they're going to see a lot of vehicles they like," Barra said.

TheStreet Ratings company team rates General Motors as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate GENERAL MOTORS CO (GM) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 12.7%. Since the same quarter one year prior, revenues slightly increased by 3.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, GM's share price has jumped by 35.10%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, GM should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The debt-to-equity ratio is somewhat low, currently at 0.87, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.82 is somewhat weak and could be cause for future problems.
  • Net operating cash flow has increased to $3,860.00 million or 14.09% when compared to the same quarter last year. Despite an increase in cash flow, GENERAL MOTORS CO's cash flow growth rate is still lower than the industry average growth rate of 30.74%.
  • GENERAL MOTORS CO's earnings per share declined by 49.4% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, GENERAL MOTORS CO reported lower earnings of $2.93 versus $4.62 in the prior year. This year, the market expects an improvement in earnings ($3.39 versus $2.93).
  • You can view the full analysis from the report here: GM Ratings Report