GM is 'paying for past sins,' analyst says

A sampling of what analysts and others are saying about GM's second-quarter financial results released today:

“We had expected GM would beat expectations handily [in North America]. Instead, the North America results are merely solid [while a 9.2 percent margin excluding recalls is] admittedly the best GM has done in years but compares to Ford, which earlier this morning reported 11.6 percent margin in North America despite a comparatively aged vehicle lineup currently."

-- Ryan Brinkman, an analyst with JPMorgan Chase & Co.

“While the result came in below our expectations, we continue to see an opportunity for GM stock to rally in 2H. As the recall clouds continue to clear out, we believe improvements in the underlying business can shine through, with China continuing to post solid results and with Europe nearing toward breakeven.” 

-- Brian Johnson, Barclays Capital

“The GMNA margin performance will likely disappoint. On the positive side, GM accrued $0.4 billion related to the announced compensation program.”

-- Joseph Spak, RBC Capital Markets

“I suspect that Ford's record performance in North America owes something to General Motors' massive, seemingly unending, auto recalls.”

-- Alex Dumortier, chartered financial analyst at The Motley Fool

“While General Motors is getting good marks for its handling of the recent heavy load of product recalls, it is paying for past sins in terms of the bottom line. In what has been a buoyant car market this year in the United States, GM’s results would have been far more robust without the heavy burden of recall expenses. The good news is that those expenses are occurring in relatively flush times for the industry and for GM in particular. Its situation would be precarious if the market were less bullish.”

-- Jack Nerad, executive market analyst for

“General Motors would have had an outstanding quarter had it not been for the recall expenses.”

-- Michelle Krebs, senior analyst for

“It was still a good quarter if you don’t include recall costs. I think across the street, people were hoping for a better profit tailwind from a better mix in prices and they didn’t quite get there…Meanwhile, China is doing fantastic. I’ve got some good expectations for Europe for next year.”

-- David Whiston, Morningstar senior analyst  

Compiled by Kathleen Burke

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