General Motors Stock: Valuation Analysis and Opportunity Amidst Driverless Car Push

General Motors stock has surged 21% in the past year and doubled its five-year return. The company is making moves, including multi-year steel supply contracts and a renewed push into driverless cars. GM has a strong value score of 5 out of 6, with 5 undervalued signals. However, valuation is just one aspect to consider. The Discounted Cash Flow (DCF) model estimates GM's intrinsic value at $92.20 per share, suggesting the stock is undervalued.

General Motors (NYSE: GM) stock has demonstrated robust performance in recent years, with a 21% surge in the past year and a doubling of its five-year return. The company has been making strategic moves, including securing multi-year steel supply contracts and accelerating its push into driverless cars. Despite these positive developments, the valuation of GM's stock remains a topic of interest among investors.

Valuation and Growth Potential

GM's stock has been trading with multipliers well below industry averages, with a forecast P/E of about 6x versus a sector median of 17x and a P/B ratio of 0.8x versus a median of 2.8x [1]. This discrepancy suggests that the market may be underestimating the long-term fundamentals of the company.

The Discounted Cash Flow (DCF) model estimates GM's intrinsic value at $92.20 per share, indicating that the stock may be undervalued [1]. This assessment is supported by the company's strong profitability, particularly in its core business segments such as full-size pickups and SUVs, which generate significant operating cash flows.

Strategic Execution and Market Position

GM's strategic execution has been focused on transforming its business model to include electric vehicles (EVs) and connected services. The company has accumulated $4 billion in deferred revenue from services like OnStar and Super Cruise, which will be recognized as services are provided [1]. GM's "double path" strategy involves investing heavily in EV projects while extending the lifecycle of high-yield models with internal combustion engines.

The company's market position has been strengthened, with increased market share in the United States and signs of recovery in China. In Q2 2025, GM's market share in the U.S. increased to 17.4%, and its sales in China rose by 20% YoY [1]. Despite the challenges posed by tariffs, GM has been able to maintain profitability and generate strong cash flows.

Financial Performance and Guidance

In the second quarter of 2025, GM reported in line with expectations, despite the negative impact of tariffs. Revenue amounted to $47.1 billion, and net income was $1.9 billion, down 35% from the previous year [1]. The company has maintained its annual target for net income, forecasting a range of $7.7–9.5 billion for 2025, despite the new costs [1].

Conclusion

General Motors stock presents an attractive opportunity for investors, with a strong value score and a potential for significant upside based on the DCF model. The company's strategic execution, robust financial performance, and clear commitment to returning capital to shareholders make it a compelling investment choice. However, investors should carefully consider the risks associated with the transition to electric vehicles and the ongoing challenges posed by tariffs.

References

[1] https://seekingalpha.com/article/4815067-general-motors-discounted-multiples-understate-long-term-fundamentals