GM Stock Retreating After Hyundai Becomes Official NFL Sponsor

NEW YORK (TheStreet) -- General Motors (GM) is no longer the official sponsor of the National Football League as the Detroit-based automaker lost its sponsorship deal to Korean car maker Hyundai Motors, the Associated Press reports. 

GM's contract dates back to 2011 when the company was given permission to use NFL trademarks in its advertising.

While the sponsorship cost about $25 million per year, the company was estimated to have spend more than $150 million per year on NFL-related marketing, the AP said.

Now that its contract has been replaced with Hyundai, this "gives the Korean car maker access to some of the most-viewed sport events in the U.S., such as the Super Bowl and the NFL playoffs," MarketWatch said.

Hyundai will have use of NFL trademarks across various marketing channels, including branded content, advertising and promotional materials. The estimated NFL fan base is at 188 million people, MarketWatch noted.

Separately, the death toll from GM's faulty ignition switches has risen by two to 119. The victims' families will be given at least $1 million in compensation, the AP noted. 

Last year, the company recalled about 2.6 million cars, but acknowledge it knew about the switch problems for more than a decade.

In Monday's afternoon trading session, shares are tumbling 2.49% to $33.53.

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 increase in net income, impressive record of earnings per share growth, notable return on equity and largely solid financial position with reasonable debt levels by most measures. We feel its 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 net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Automobiles industry. The net income increased by 343.7% when compared to the same quarter one year prior, rising from $213.00 million to $945.00 million.
  • GENERAL MOTORS CO reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. 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 ($4.49 versus $1.64).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Automobiles industry and the overall market on the basis of return on equity, GENERAL MOTORS CO has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 6.8%. Since the same quarter one year prior, revenues slightly dropped by 4.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • Even though the current debt-to-equity ratio is 1.33, it is still below the industry average, suggesting that this level of debt is acceptable within the Automobiles industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.79 is weak.
  • You can view the full analysis from the report here: GM Ratings Report

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