GM: The Biggest Earnings Takeaways

It's true that decades of mismanagement of General Motors led to a painful bankruptcy in 2009, but it emerged a leaner, stronger company. GM's turnaround, however, is still a work in progress. Investors around the world are wondering if GM has what it takes to reclaim its former glory. John Rosevear has put together a brand-new premium research report telling you what you need to know about GM and its turnaround. If you own or are thinking about owning GM, then you don't want to miss this report. Click here now to get started.

Andrew Tonner: Hey Fools, Andrew Tonner here. I'm joined today by Brendan Byrnes, our Fool.com Analyst.

Brendan, let's take a look at GM (NYSE: GM  ) -- General Motors -- recently released earnings, extremely well-followed stock, a bellwether for the American economy. When you looked at their earnings what were your takeaways?

Brendan Byrnes: Overall, a slight beat on revenues, a slight miss on earnings. The story remains the same, and the story is the same as Ford (NYSE: F  ) when you look at it from a 30,000 foot view, which is strong in North America, weak in Europe.

Overall, North America margins still well behind Ford. A lot of that has to do with pickup trucks, 5.8% margins last quarter in North America, Ford clocked in 8.4% in North America in the last quarter, so that's definitely something to watch especially as GM moves into a refresh on two big pickup trucks, Chevy Silverado and the GMC Sierra, coming out this summer. Keep an eye on that. That drives margins significantly.

Watch, also, incentives. Higher incentives than we would have liked to see toward the end of the year, which translates obviously to lower pricing coming in for GM, keep an eye on that, and Europe. Europe remains a big problem.

GM lost $1.8 billion there in 2012, Ford lost $2 billion. It's not going to get better any time soon, especially not in 2013. GM, like Ford, says they're on track for a break even by mid-decade. Keep an eye on that because a lot of times they come out and say this, but then they have to revise downward later. Investors need to keep a very steady eye on that.

Already wrote down half of the deal with Peugeot that they had. It didn't really make sense at the time. We kind of head-scratched because it didn't solve their inherent problem in Europe, which is over capacity and obviously just not enough people buying cars, but that's something that no one really knew what they were doing at the time, or at least a lot of people were kind of unsure with that. We see the write down. That's not good news, overall.

Then when you look at the Japanese auto makers, we've seen the yen weaken recently, which is good news for them as they export cars from Japan. Also keep an eye on Honda (NYSE: HMC  ) and Toyota (NYSE: TM  ) in the world's biggest auto market, which is China. We've seen some flare-ups between Japan and China. You wonder how that impacts them, going forward.

GM, of course, selling very well in China overall, the market share leader there along with VW. Overall, nothing should change your thesis about GM this quarter, I don't think. If you're bullish on it in the long term, you should remain bullish on it. This is not a quarter to go out and sell, sell, sell, or a quarter to necessarily go out and buy, buy, buy if you weren't sure before.

But I think this is overall a solid quarter. GM continues to move toward their goal of common platforms, reducing costs. Keep an eye on what I mentioned, Europe especially. Keep an eye on the Japanese auto makers coming in, and on those margins, especially in North America.

Andrew: Yeah, definitely a few things for an investor really to key on. Thanks for your insight, Brendan. Thanks for watching, folks, and we'll see you at Fool.com.


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