This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

GM May Have Turned the Corner

DETROIT ( TheStreet) -- Is the tide turning for GM (GM - Get Report)?

As the automaker prepares to report earnings Thursday, some of the negatives in its outlook appear to be easing. On Tuesday, GM said April sales rose 26.4%, led by sales of its small, fuel-efficient cars.

GM's stock has risen 12% since April 19, when it sank to a post-IPO price of $29.17. In midday trading Wednesday, shares were dipping 5 cents to $32.94. That's close to the $33 IPO price and not far from the $35 opening price on Nov. 18, the first day of trading.

Without question, U.S. consumers are looking hard at the Detroit Three's offerings when they shop. In April, Ford (F - Get Report) reported a 16.4% rise in sales , as the company's small-car lineup made gains even in import-obsessed California.

>>GM: April Sales Led by Small Cars



Meanwhile, Chrysler has emerged as a far-stronger company than anyone expected it to be. It posted first-quarter net income of $116 million, compared with a net loss of $197 million in the same quarter a year earlier, and said its April sales improved by 22%.

Of course, GM still faces questions. In the first quarter, its sales rose 9.9%, prompting IBISWorld Inc analyst Casey Thormahlen to write in a recent report that "while any growth is a positive sign, GM's sales growth is still far slower than what other manufacturers have achieved, causing the company's market share to continue declining."

Thormahlen expects that GM "will display modest revenue growth and a slimmer profit margin" when it reports on Thursday.

Some Wall Street analysts are nevertheless optimistic about the company, saying it will benefit from the decline in Japanese production due to the earthquake and tsunami and from a low valuation relative to Ford. On Tuesday, UBS analyst Colin Langan upgraded GM to a buy and raised his price target to $42, largely on the strength of impending inventory shortages for Japanese manufacturers.

Morgan Stanley analyst Adam Jones estimates GM will earn $1.25 for the quarter, far above consensus, based largely on declining incentives, improvement in Europe and stronger EBIT as production increased.

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

"Ford's strong 30% beat vs. consensus in Q1 sure raises the bar for GM," Jonas wrote in a recent report. And Deutsche Bank analyst Rod Lache wrote that "Ford's results suggest we should buy GM," since GM "appears to be trading at a far steeper discount to fair value."

For the first quarter, analysts surveyed by Thomson Reuters are expecting earnings of 91 cents a share on revenue of $35.6 billion. In the fourth quarter of 2009, GM reported a profit of $510 million -- or 31 cents a share -- on revenue of $36.9 billion. Excluding items, earnings were 52 cents a share, beating estimates by 6 cents.

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here: Ted Reed

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
F $16.01 0.00%
GM $37.35 0.00%
AAPL $124.24 0.00%
FB $83.01 0.00%
GOOG $555.17 0.00%

Markets

DOW 17,678.23 -40.31 -0.23%
S&P 500 2,056.15 -4.90 -0.24%
NASDAQ 4,863.3620 -13.1570 -0.27%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs