Will GM Stock Be Helped by China Vehicle Sales?
NEW YORK (TheStreet) -- General Motors (GM) - Get Report reported a 15% rise in its October vehicle sales in China. Retail sales in the country popped by 2.9% for the first 10 months of 2015, Reuters reports. There were 2.8 million vehicles sold.
The Chinese government recently made the decision to cut taxes for smaller cars.
"The recently announced government incentive for vehicle purchases helped boost buying sentiment starting in October," GM China President Matt Tsien said in a statement.
China had been looking for ways to increase auto sales and implemented a number of supportive measures, including cutting sales tax on cars with 1.6 liter engines or smaller in half, Reuters added.
Additionally, leaders of the United Auto Workers union are pushing members to ratify a proposed contract from GM after a number of factories rejected it in initial rounds of voting, the Wall Street Journal reports.
GM could be hit with a strike if a deal isn't agreed on.
Shares of GM are down by 0.56% to $35.22 at the start of trading on Thursday morning.
Separately, TheStreet Ratings team rates GENERAL MOTORS CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
We rate GENERAL MOTORS CO (GM) a BUY. This is driven by multiple 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 solid stock price performance, notable return on equity, good cash flow from operations and growth in earnings per share. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to the other companies in the Automobiles industry and the overall market, GENERAL MOTORS CO's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
- Net operating cash flow has significantly increased by 204.04% to $3,308.00 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 8.45%.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 7.5%. Since the same quarter one year prior, revenues slightly dropped by 1.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- GENERAL MOTORS CO's earnings per share improvement from the most recent quarter was slightly positive. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, GENERAL MOTORS CO reported lower earnings of $1.64 versus $2.35 in the prior year. This year, the market expects an improvement in earnings ($4.79 versus $1.64).
- You can view the full analysis from the report here: GM
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.