How Will General Motors (GM) Stock Be Affected Today By This New Round Of Recalls?

NEW YORK (TheStreet) -- General Motors (GM) is recalling 221,000 cars due to a parking brake issue with its 2013-2015 Cadillac XTS and the 2014-2015 Chevrolet Impala models, the company announced over the weekend.

The issue stems from a flaw that causes the brakes to overheat which could potentially lead to a fire.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

The automotive company reported that there haven't been any injuries or fatalities related to the recall.

This year GM has recalled more cars than it makes in a year, with over 26 million vehicles being recalled for various defects, including an ignition switch issue that is known to have killed at least 19 people.

General Motors shares are up 0.09% to $33.97 in pre-market trading today.

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 some important positives, 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 revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 11.3%. Since the same quarter one year prior, revenues slightly increased by 1.5%. 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.
  • The debt-to-equity ratio is somewhat low, currently at 0.95, 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 ($2.71 versus $2.35).
  • Net operating cash flow has decreased to $3,830.00 million or 21.72% when compared to the same quarter last year. Despite a decrease in cash flow of 21.72%, GENERAL MOTORS CO is in line with the industry average cash flow growth rate of -26.59%.
  • The share price of GENERAL MOTORS CO has not done very well: it is down 9.45% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Despite the stock's decline during the last year, it is still somewhat more expensive (in proportion to its earnings over the last year) than most other stocks in its industry. We feel, however, that other strengths this company displays offset this slight negative.
  • You can view the full analysis from the report here: GM Ratings Report
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