GM Stock Falls on Disappointing December U.S. Sales

NEW YORK (TheStreet) -- General Motors Co. (GM) stock is decreasing 2.70% to $32.41 in early afternoon trading on Tuesday after the company reported a 5.7% year-over-year increase in U.S. sales for December, falling short of Bloomberg estimates of a 10% gain.

The automaker delivered 290,230 vehicles, with retail sales rising 8.2% to 241,724 cars last month.

Total sales for 2015 were up 5% to 3.08 million vehicles, driven by the Chevrolet and GMC brands. Sales of Chevrolet vehicles increased 4.5% last year, while GMC sales gained 11.3%.

GM is confident its sales will continue to grow in 2016, but TheStreet's Doug Kass believes the auto industry may struggle this year.

"I'm firm in my view of 'Peak Autos,' based on the notion that liberal financing over the last five years has substantially pulled forward car sales," Kass wrote on his Real Money blog. "I also think that the coming mobility and autonomous-car markets pose substantive threats to the industry."

On Monday, GM announced the company will invest $500 milling in Lyft and collaborate on an autonomous vehicle system with the ride-sharing service.

Additionally, GM's board appointed CEO Mary Barra as chairman. She replaced Theodore Solso, who will remain with the company as lead independent director.

Recently, 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 few notable 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 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 sub par growth in net income.

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

  • 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 12.12%.
  • 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 ($4.78 versus $1.64).
  • GM, with its decline in revenue, underperformed when compared the industry average of 9.3%. 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.
  • The gross profit margin for GENERAL MOTORS CO is rather low; currently it is at 18.86%. Regardless of GM's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.49% trails the industry average.
  • You can view the full analysis from the report here: GM