On Feb 18, we maintained our Neutral recommendation on General Motors Company ( GM - Analyst Report ) 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.

Why Maintained?

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 year.

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 operates include Oshkosh Corporation ( OSK - Snapshot Report ) and Strattec Security ( STRT - Snapshot Report ) with Zacks Rank #1 (Strong Buy) and Volkswagen AG ( VLKAY ) with Zacks Rank #2 (Buy).