How is General Motors Using Strong Cash Flow to Fuel Growth?

General Motors Company’s GM strong foundation and disciplined operating approach have significantly strengthened its financial performance in recent years. Over the past five years, the company’s average annual free cash flow (FCF) has increased from approximately $3 billion to $10 billion.

The consistent and robust cash generation has enabled GM to execute all phases of its capital allocation strategy, including investing in the business and its workforce, maintaining a strong balance sheet and returning capital to shareholders. It has allowed the company to increase its quarterly dividend by 20%. GM plans to pursue additional share repurchases.

At the same time, General Motors’ product portfolio has continued to improve, contributing to market share gains of 60 basis points in 2025 while maintaining some of the lowest incentive levels in the automotive industry. This disciplined strategy has been a major driver of the company’s nearly $25 billion in FCF generated over the past two years. During this period, the company invested more than $20 billion in capital projects to support growth in its core operations and advance key strategic priorities.

Looking ahead to 2026 and 2027, General Motors expects to continue this momentum by investing between $10 billion and $12 billion annually. Approximately $5 billion of this investment will be directed toward expanding U.S. manufacturing capacity for several of its highest-demand vehicles while helping the company reduce its exposure to tariffs. GM carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

How Other Automakers Are Utilizing Their Cash Flows

Ford Motor Company F generated $3.5 billion in FCF and ended 2025 with nearly $29 billion in cash and close to $50 billion in total liquidity. The legacy automaker continues to prioritize maintaining a strong balance sheet, which provides flexibility to invest in growth opportunities, such as Ford Energy, as well as software and physical services. These remain high-margin and high-growth domains for Ford. For 2026, Ford expects adjusted free cash flow between $5 billion and $6 billion, which is roughly $2 billion higher than in 2025.

Rivian Automotive, Inc. RIVN reported a decline in its cash balance to $3.5 billion at the end of 2025 from $5.3 billion in 2024, as the company continues to burn cash while pursuing long-term growth. Additionally, Rivian forecasts capex in the band of $1.95-$2.05 billion (up from $1.7 billion spent in 2025), primarily to complete R2 construction and tooling, begin vertical construction at its new Georgia plant and expand its sales, service and charging network. While these efforts bode well for long-term prospects, they are likely to strain Rivian’s near-term cash flows.

GM’s Price Performance, Valuation and Estimates

General Motors has outperformed the Zacks Automotive-Domestic industry. Its shares have gained 24.6% compared with the industry’s growth of 8.7%.

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From a valuation perspective, GM appears undervalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 0.36, lower than the industry’s 3.36.

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The Zacks Consensus Estimate for GM’s 2026 and 2027 EPS has moved up 2 cents and 10 cents, respectively, in the past 30 days.

Image Source: Zacks Investment Research

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Ford Motor Company (F): Free Stock Analysis Report

General Motors Company (GM): Free Stock Analysis Report

Rivian Automotive, Inc. (RIVN): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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