General Motors Company (NYSE:GM) is the nation’s largest automaker and number two worldwide behind Toyota Motor Corporation (ADR) (NYSE:TM). General Motors Company (NYSE:GM)‘s first quarter was a mixed bag, though on the whole, it was better than what was expected. Overall first quarter earnings came to $865 million, or $0.58 per share, about 12% below the year-ago quarter on lowered demand and increased vehicle discounts. Absent one-time items, General Motors Company (NYSE:GM)‘s earnings would have come to $0.67 per share, swamping estimates of $0.54 per share. On the relatively good news, the stock reached levels not seen for about 22 months, and came close to the post-bankruptcy offering price of $33 per share. The government is still the largest stockholder in General Motors Company (NYSE:GM), with over 240 million shares, meaning every point up or down in General Motors Company (NYSE:GM)‘s stock is worth nearly a quarter billion dollars for taxpayers.
General Motors Company (NYSE:GM) took some pains to break down everything by geography, but failed to consider where the GM vehicles were manufactured, as had been the practice, but rather, where the product was sold. Chevy Spark cars, built in South Korea, count as North American sales when sold in the country.
North America, in fact, continued to provide the vast bulk of GM’s profits, with operating earnings of $1.41 billion. But, what has really caused some optimism in GM’s future is that the company’s European unit narrowed its loss to $175 million from the $294 million it posted a year ago. GM’s stated goal is for the unit, long a huge money loser, to come back to break-even status by 2015. This quarter went a long way to lending support to that.
GM has been relatively innovative about revenue streams in recent years. Its OnStar service is used by some six million customers. It recently inked a deal to provide AT&T Inc. (NYSE:T) wireless service in its vehicles to enrich the OnStar experience.
The health of the world retail economy has a great impact on all auto companies. GM has a five year PEG of 0.51, below average even for the notoriously cyclical auto business. But, GM has wrung much of the excess out of its business through the bankruptcy, and is not as cyclical as it historically has been.