NEW YORK (TheStreet) -- General Motors Co. (GM - Get Report) is doing a great job selling cars and trucks this year. However, its stock is down 8% this year, which means it has underperformed the S&P's 500 index by 15% and Ford's (F - Get Report) stock by 21 points, not counting dividends, according to Barron's "Ahead of the Crowd" column.
Why the disconnect, asks Barron's? "A faulty ignition scandal has marred GM's image, costing it two-thirds of last year's profit in recall fees. Yet last month the company sold 1% more vehicles than a year ago.
"Adjusted for two fewer selling days in June this year, sales were up 9%. Pricing looks plump, too. GM says average transaction prices are up $2,700 over last year.
However that disconnect between company strength and stock weakness makes GM worth a look by bargain hunters. Now just under $38, they should rise more than 30% to $50 over the next year."Shares of GM are down -0.56% to $37.49 in early afternoon trade. Must Read: Warren Buffett's 25 Favorite Growth Stocks
- GM's revenue growth trails the industry average of 21.9%. Since the same quarter one year prior, revenues slightly increased by 1.4%. 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.
- Net operating cash flow has significantly increased by 141.26% to $1,976.00 million when compared to the same quarter last year. In addition, GENERAL MOTORS CO has also vastly surpassed the industry average cash flow growth rate of 41.88%.
- The debt-to-equity ratio is somewhat low, currently at 0.89, 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 0.81 is somewhat weak and could be cause for future problems.
- GENERAL MOTORS CO has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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 $2.35 versus $2.93 in the prior year. This year, the market expects an improvement in earnings ($3.14 versus $2.35).
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- You can view the full analysis from the report here: GM Ratings Report