General Motors Company (GM) will be replacing H.J. Heinz Co. (HNZ) in the Standard & Poor’s 500 and Standard & Poor’s 100 indices after the close of trading on Jun 6, 2013. The automaker was removed from the S&P 500 index in 2009 due to bankruptcy filing and $50 billion government bailout. General Motors returned to the New York Stock Exchange in 2010.
Heinz on the other hand will be acquired by Warren Buffett’s Berkshire Hathaway Inc. and a private equity firm of Jorge Paulo Lemann’s 3G Capital.
The return of the automaker in the America's benchmark stock market indicates that the automaker has been able to enhance investor value. Recently, shares of General Motors hit new 52-week high of $33.77 on May 17, above its previous level of $32.44 as well as the Initial Public Offering (:IPO) price of $33.00 (held in Nov 2010).
Shares of the company started escalating following its announcement of revival plan in Europe and U.S. Treasury department’s announcement of selling a significant stake in the company as well as improvements in the U.S. and Chinese markets.
GM reported a 28.0% fall in earnings to 67 cents per share in the first quarter of the year from 93 cents in the same quarter of 2012 (all excluding special items) due to lower profits generated from the company’s all geographic operations except Europe. Despite this, the automaker’s earnings exceeded the Zacks Consensus Estimate by 11 cents per share.
Revenues in the quarter slid 2.4% to $36.9 billion, despite a 3.6% rise in retail unit sales to 2.4 million vehicles globally. Nevertheless, revenues were higher than the Zacks Consensus Estimate of $36.4 billion.
General Motors is gearing up for more than 40 major vehicle launches in 2013 across the globe in order to drive sales and revenues. In addition, the company expects its European results will improve further based on its cost reduction measures.
Currently, shares of GM retain a Zacks Rank #3 (Hold). While we remain on the sidelines about General Motors, STRATTEC Security Corp (STRT) and Visteon Corp. (VC) are currently performing well in the auto industry and carry a Zacks Rank #1 (Strong Buy).
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