GM Stock Up on Earnings Despite Potential $550 Million Recall

GM (GM) stock is advancing today on positive fiscal 2016 second quarter results, despite a possible recall of 4.3 million vehicles for potentially defective air bags.
By Natalie Walters ,

NEW YORK (TheStreet) -- Shares of General Motors (GM) - Get Report are up 1.11% to $31.84 in mid-afternoon trading on positive earnings results, even though the company announced on Thursday that U.S. regulators may force a recall of another 4.3 million vehicles for potentially faulty Takata (TKTDY) air bags, Reuters reports. 

The recall would cost the Detroit, MI-based vehicle manufacturer $550 million.

GM had previously recalled 1.9 million vehicles for potentially defective air bags in May, before adding another 600,000 vehicles to the recall in June. The cost for those two recalls will be up to $320 million, but the company hasn't started repairs on any vehicles. 

The company said it doesn't think the air bags are faulty but has complied with the recalls. GM said that "the results of further testing and analysis will demonstrate that the vehicles do not present an unreasonable risk to safety and that no repair will ultimately be required."

Takata airbags have been linked to 13 deaths and more than 100 injuries. 

Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate GENERAL MOTORS CO as a Buy with a ratings score of B-. 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 compelling growth in net income, revenue growth, notable return on equity, attractive valuation levels and impressive record of earnings per share growth. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

You can view the full analysis from the report here: GM

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