General Motors: Recall GM Stock

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On Wednesday, General Motors (GM) Chief Executive, Mary Barra, outlined an aggressive strategic plan for the auto company. Notably, GM expects to achieve 10% operating margin in world-wide operations by early next decade.

Is this new plan enough to dig GM out of the hole?General Motors NYSE:GM

Company Profile

Once a global institution, General Motors is an American car-maker, whose roots trace back to 1908. General Motors is behind household car names like Cadillac, Chevrolet and GMC in the U.S. as well as Opel and Vauxhall in Europe.

Currently, GM employs just over 210,000 worldwide and operates in just under 160 countries. Income-seekers may note that GM pays a 3.7% dividend, but I don’t consider that enough of a reason to buy GM shares now.

Earnings Outlook

General Motors has had a rough year. GM is trying to recover from 30 million recalls from this year alone. GM’s second-quarter earnings were impacted by the recalls. So, GM reported just $200 million in net income, compared to $1.2 billion in the same quarter last year.

General Motors’ third-quarter results look like they will be lukewarm at best, with the consensus earnings growth estimate at 4.2%. GM shares have fallen more than 20% year-to-date and don’t show any signs of rebounding soon.

Current Ratings

General Motors has been struggling over the past few months, consistently earning an “F” for its Quantitative Grade, which indicates poor buying pressure behind GM stock.

Meanwhile, GM is still struggling in terms of its fundamentals, especially earnings growth and earnings momentum (Fs). GM is also floundering in terms of sales growth, operating margin growth, earnings surprises, analyst earnings revisions and cash flow (Ds). The last metric, return on equity, receives a “C.” Overall, GM earns a “D” for its Fundamental Grade.

As of this posting, October 2, I consider GM an “F-rated strong sell.”

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Louis Navellier is a renowned growth investor. He is the editor of five investing newsletters: Blue Chip GrowthEmerging GrowthUltimate GrowthFamily Trust and Platinum Growth. His most popular service, Blue Chip Growth, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.


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