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General Motors Poised on Strategic Initiatives amid Headwinds
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On Jun 23, 2016, we issued an updated research report on General Motors Company (GM - Free Report) . The company continues to gain from its investments in the U.S., directed toward strengthening its operations along with new product launches. It will also benefit from new contracts and initiatives undertaken to make its vehicles more advanced, safer and fuel efficient.
However, General Motors faces challenges due to the scaling down or closure of its manufacturing operations, as well as recall-related repair and compensation expenses. The company’s estimates have been declining ahead of its second-quarter 2016 earnings release. However, the automaker has delivered positive earnings surprises in recent quarters and expects earnings per share to increase in 2016.
General Motors is focused on investment in innovative technologies and vehicles which should provide sustained growth while maximizing shareholder value. In Apr 2016, the company announced an investment of $788.7 million in the Spring Hill manufacturing plant. The investment will be utilized for an all-new, high-efficiency engine program, and other projects which will modernize the vehicle programs at the plant. Simultaneously, it announced a $118 million investment in the Bay City Powertrain facility.
The company is presently focused on autonomous vehicle development. In Mar 2016, General Motors announced the acquisition of Cruise Automation through which it will be able to use Cruise’s deep software talent to develop autonomous vehicle technology.
General Motors is also focused on alternate transportation models. In Jan 2016, it launched a new car-sharing service called Maven to seize the opportunities in ride- and car-sharing services. In May 2016, the automaker expanded Maven to Boston, Chicago and Washington, D.C.
General Motors expects 2016 earnings per share in the range of $5.25–$5.75, higher than $5.02 recorded in 2015. Management also anticipates higher adjusted earnings before interest and tax (EBIT) and adjusted EBIT margin. The company plans to further improve its results this year by launching new vehicles, expanding its business and driving efficiency in core operations.
However, General Motors has been forced to scale down or discontinue its manufacturing operations in some regions due to production constraints such as high costs and unfavorable currency translation effects. The automaker is facing a challenging situation in Russia on account of declining sales due to a weak economy.
In addition, General Motors has been facing the heat for delaying the recall of 2.6 million vehicles with defective ignition switches. It has coughed up $2 billion as settlements for these faulty switches with the U.S. Justice Department, shareholders and consumers. It also paid around $575 million to resolve shareholder litigations, and to settle death and injury claims.
Currently, General Motors carries a Zacks Rank #3 (Hold).
Some better-ranked automobile stocks include Lear Corp. (LEA - Free Report) , Oshkosh Corporation (OSK - Free Report) and Superior Industries International, Inc. (SUP - Free Report) , all sporting a Zacks Rank #1 (Strong Buy).
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General Motors Poised on Strategic Initiatives amid Headwinds
On Jun 23, 2016, we issued an updated research report on General Motors Company (GM - Free Report) . The company continues to gain from its investments in the U.S., directed toward strengthening its operations along with new product launches. It will also benefit from new contracts and initiatives undertaken to make its vehicles more advanced, safer and fuel efficient.
However, General Motors faces challenges due to the scaling down or closure of its manufacturing operations, as well as recall-related repair and compensation expenses. The company’s estimates have been declining ahead of its second-quarter 2016 earnings release. However, the automaker has delivered positive earnings surprises in recent quarters and expects earnings per share to increase in 2016.
General Motors is focused on investment in innovative technologies and vehicles which should provide sustained growth while maximizing shareholder value. In Apr 2016, the company announced an investment of $788.7 million in the Spring Hill manufacturing plant. The investment will be utilized for an all-new, high-efficiency engine program, and other projects which will modernize the vehicle programs at the plant. Simultaneously, it announced a $118 million investment in the Bay City Powertrain facility.
The company is presently focused on autonomous vehicle development. In Mar 2016, General Motors announced the acquisition of Cruise Automation through which it will be able to use Cruise’s deep software talent to develop autonomous vehicle technology.
General Motors is also focused on alternate transportation models. In Jan 2016, it launched a new car-sharing service called Maven to seize the opportunities in ride- and car-sharing services. In May 2016, the automaker expanded Maven to Boston, Chicago and Washington, D.C.
General Motors expects 2016 earnings per share in the range of $5.25–$5.75, higher than $5.02 recorded in 2015. Management also anticipates higher adjusted earnings before interest and tax (EBIT) and adjusted EBIT margin. The company plans to further improve its results this year by launching new vehicles, expanding its business and driving efficiency in core operations.
However, General Motors has been forced to scale down or discontinue its manufacturing operations in some regions due to production constraints such as high costs and unfavorable currency translation effects. The automaker is facing a challenging situation in Russia on account of declining sales due to a weak economy.
In addition, General Motors has been facing the heat for delaying the recall of 2.6 million vehicles with defective ignition switches. It has coughed up $2 billion as settlements for these faulty switches with the U.S. Justice Department, shareholders and consumers. It also paid around $575 million to resolve shareholder litigations, and to settle death and injury claims.
GENERAL MOTORS Price and Consensus
GENERAL MOTORS Price and Consensus | GENERAL MOTORS Quote
Zacks Rank
Currently, General Motors carries a Zacks Rank #3 (Hold).
Some better-ranked automobile stocks include Lear Corp. (LEA - Free Report) , Oshkosh Corporation (OSK - Free Report) and Superior Industries International, Inc. (SUP - Free Report) , all sporting a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>