Initiated 2026-10-28 · Price $80.54 (as of 2026-10-27 close, stockanalysis) · Mkt cap $67.9bn (843.6mm shares; $69.1bn on 858.5mm diluted) · Consumer discretionary / automobiles · Model: verified

Rating: Hold — Conviction: Medium

GM's car business is cheap at ~3.3x automotive EBITDA with $7.3bn of net cash. But earnings are near a cyclical high, helped in 2026 by warranty savings and tariff refunds that won't all repeat; US truck share is slipping; and trade terms for Mexican-built vehicles are unsettled. Base is worth roughly today's price. The upside skew depends on margins holding, so Hold.

Conviction tests (3a-v-c): T1 pass (Base −1.9% at +1pp, +12.0% at −1pp; Hold at both) · T2 pass (Gordon +10.3%, exit −1.4%; Hold on either) · T3 pass (all FY0 facts and historicals from EDGAR or GM filings; the one estimate, a residual debt tranche, doesn't move value) · T4 fail (the US–Mexico trade deadline, extended past 1 November, could alone move value >25% if Mexican-built vehicles lose preferential access)

Model value range vs price
Bear $45.30Base $84.13Bull $131.57Price $80.54

Business overview

GM sells Chevrolet, GMC, Buick and Cadillac vehicles and runs GM Financial, a captive lender ($91.8bn of receivables, $32.2bn of leased vehicles). FY2025 revenue was $185.0bn: automotive $168.0bn and GM Financial $17.1bn. GM North America produces nearly all of the profit. In the first nine months of 2026, GMNA made $10.7bn of EBIT-adjusted (8.7% margin in Q3). GM International made $0.34bn and GM Financial $1.96bn, against $0.70bn of corporate costs. 72% of wholesale volume is in the US. Three things drive earnings: (1) volume and pricing of full-size pickups and SUVs; (2) tariffs, estimated at $2.5–3.5bn for 2026; (3) EV losses and the cost of shrinking EV capacity, which brought $3.6bn of special charges in nine months.

Competition

The profit pool is US full-size trucks, where GM competes with Ford (F-Series), Stellantis (Ram) and Toyota (Tundra). In crossovers it competes with Toyota, Honda and Hyundai-Kia. GM's share is slipping. In Q3 2026 it held 16.1% of the US market, against 16.8% a year earlier. Its truck share fell from 32.3% to 31.0% and its crossover share from 13.5% to 12.8% (GM Q3 release, current quarter). Ford Pro, its closest truck rival, earned $1.7bn of EBIT on $17.8bn of revenue in Q2 2026, a 9.7% margin (Ford Q2 release via search summary, four months old). Pressure would show first as pickup incentives. Ford trades at 6.7x forward earnings against GM's 5.75x; Stellantis (4.7x, deeply negative FCF) is distressed, not a fair comparison.

Bull case

  1. The truck franchise holds volume — GMNA wholesale volume is flat year to date in a shrinking market; price/mix keeps automotive revenue growing ~3% a year. Plays out if the US annual sales rate holds near current levels and truck share stabilizes around 31%. Model: rev_growth, terminal_growth
  2. Margins hold near 11.5–12% — GMNA stays around 9.5–10%, against 8.7% in Q3. EV losses shrink after the capacity realignment, and the $1.7bn of warranty savings persist. Plays out if 2027 guidance holds EBIT-adjusted near $15bn. Model: ebitda_margin
  3. Modest re-rating — a net-cash, investment-grade automaker at 3.3x EBITDA moves toward 4x. Plays out if two years of steady FCF shrink the cyclical discount. Model: exit_ev_ebitda

Bear case

  1. US auto downturn — FY2027 automotive revenue falls ~10% on lower volume and pricing. Decrementals run near 35%, taking EBITDA margin to ~8.5%. Plays out if auto-loan rates stay high and labor weakens. Model: rev_growth, ebitda_margin
  2. Structural truck share loss — the Q3 share slide continues and the margin settles at 9–9.5%. The market keeps a trough multiple (2.5x). Plays out if competitors' refreshed trucks and incentives keep taking share. Model: ebitda_margin, terminal_growth, exit_ev_ebitda
  3. Capex stays high — the 2026 capex guide is $10–12bn, about 6% of sales and above D&A of ~4%. It stays high to defend trucks as revenue falls. Plays out if the 2027 capex guide doesn't drop. Model: capex_pct_rev
  4. Tariff escalation on Mexican-built vehicles — the US demand for 50% US content is unresolved. Model: not in the value range — event risk outside the cases (T4)

Valuation & balance sheet

Metric (definition) Current Own history (range or 5y avg) Peers Source, as-of
EV/EBITDA, model basis (diluted mkt cap − automotive cash + automotive debt + pensions/OPEB/NCI − GM Financial book equity; automotive EBITDA, excl. GM Financial) 3.27x FY2025 EBITDA $16,949mm (2.86x LTM $19,388mm) n/a (unverified) not computed on this basis Q3 release/10-Q 2026-09-30; price 2026-10-27
EV/EBITDA TTM (stockanalysis, consolidated incl. captive-finance debt) 9.08x n/a (unverified) F 24.58x · TM 12.51x · HMC 12.93x · STLA n/a stockanalysis, 2026-10-27 close
P/E forward (stockanalysis consensus) 5.75x (company adj. EPS guide $12.75–13.75 → 5.9–6.3x) 52-week change +15.6% F 6.68x · TM 14.37x · HMC 11.26x · STLA 4.72x stockanalysis; Q3 release
FCF yield (company FY2026 adjusted automotive FCF guide $11.5–12.5bn / mkt cap) 16.9–18.4% (TTM 21.2%, stockanalysis) adj. auto FCF $11.7bn / $14.0bn / $10.6bn FY2023–25 F 15.6% · TM −2.3% · HMC 4.0% · STLA −106.9% Q3 release; FY2025 release; stockanalysis

Model-implied value range (from model-summary.json; generic module covering automotive only, with GM Financial at book as an offset claim; Gordon-growth DCF and exit-EV/EBITDA DCF, midpoints): Bear $45.30 · Base $84.13 · Bull $131.57 per share, i.e. implied returns of −43.7% / +4.5% / +63.4% vs $80.54. These ranges show how the bull and bear drivers translate into value; they are not price targets. The price sits just under Base: the market prices margins normalizing to ~10.5%, with no credit for the bull case. The exit method uses 3.25x, a ~1% de-rating from today's 3.27x, and gives $79.39. The Gordon method gives $88.87. Its terminal value implies ~4.0x Y5 EBITDA, a ~23% re-rating. The 12% gap between the methods is that re-rating, not noise. Tail sensitivity: revenue −15% in FY2027 and −5% in FY2028, EBITDA margin 7–8%, NWC 1pp worse, exit 2.0x, WACC 12.5% and terminal growth −1% give $24.25 (−69.9%).

Balance sheet: not meaningful: automotive is net cash ($23.1bn of cash and marketable securities against $15.8bn of debt at 2026-09-30). Gross leverage is 0.93x FY0 EBITDA. Automotive liquidity is $37.1bn, including $14.0bn of undrawn credit facilities. The nearest material maturity is $1.9bn in 2027. GM Financial's $113bn of debt sits inside the business the model values at book. Ratings: investment grade at DBRS, Fitch, Moody's and S&P, unchanged since 2025-12-31 (10-Q). Specific ratings n/a (unverified).

Model note: Built and verified (LibreOffice matched all 3,207 formula cells). Unverified input: the post-2030 debt tranche ($10,393mm), a residual that doesn't change value. Assumptions without basis: none. No consistency CHECKs. GM Financial is held at 1.0x its $15.5bn common book equity, which is a judgment: at 1.2x, value rises ~$3.61/sh. Cash, debt and claims are at 2026-09-30, so NWC levels carry +$8,134mm of 9M 2026 FCF already in that cash; Y1 FCF (−$0.84bn) is in effect Q4 only. The cash tax rate rises from 14% to 20% by Y5 as $23.8bn of deferred tax assets is used up. Base WACC is 10.6%, the CAPM/market-weight arithmetic (β 1.40, rf 4.99%) rounded, with no adjustment. Model Y1 EPS of $12.84 is 3% below the $13.25 guide midpoint by coincidence: it leaves out GM Financial's earnings (~$2/sh) but uses a lower tax rate and fewer shares.

Relative value vs peers
MetricGMFTMHMCSTLAPeer medianvs median
P/E (TTM)19.1xn/a8.9xn/an/an/a
P/E (forward)5.8x6.7x14.4x11.3x4.7x9.0x−36%
PEG0.3x0.3xn/an/an/an/a
EV/EBITDA (TTM)9.1x24.6x12.5x12.9xn/a12.9x−30%
EV/Sales (TTM)0.9x1.0x1.4x0.7x0.2x0.9x+5%
P/B1.1x1.3x1.0x0.6x0.2x0.8x+41%
FCF yield (TTM)21.2%15.6%-2.3%4.0%n/a4.0%+17.2pp
Dividend yield0.9%5.1%2.7%3.0%n/a3.0%−2.1pp
P/E (TTM)GM19.1xTM8.9x
P/E (forward)TM14.4xHMC11.3xF6.7xGM5.8xSTLA4.7x
PEGGM0.3xF0.3x
EV/EBITDA (TTM)F24.6xHMC12.9xTM12.5xGM9.1x
EV/Sales (TTM)TM1.4xF1.0xGM0.9xHMC0.7xSTLA0.2x
P/BF1.3xGM1.1xTM1.0xHMC0.6xSTLA0.2x
FCF yield (TTM)GM21.2%F15.6%HMC4.0%TM-2.3%
Dividend yieldF5.1%HMC3.0%TM2.7%GM0.9%

As of 2026-10-28. One source and one definition for every company: TTM multiples, forward P/E on stockanalysis consensus, EV/EBITDA and EV/Sales on stockanalysis consolidated EV, which includes each company's captive-finance debt (GM Financial, Ford Credit, Toyota/Honda finance arms). Not the model's own automotive-only EV basis (3.27x). Quotes are the 2026-10-27 4:00 PM EDT close (market closed when fetched on 2026-10-28). Dashed line = peer median. Source: stockanalysis.com /stocks/<ticker>/statistics/, fetched 2026-10-28.

Notes. GM's TTM P/E is inflated by EV strategic realignment charges ($3.6bn of adjustments in 9M 2026); the forward P/E is the more comparable figure. The source shows n/a for Ford, Honda and Stellantis TTM P/E. PEGs are the source's own, resting on its analyst growth estimates; the source shows none for Toyota, Honda and Stellantis. Ford's 24.6x reflects depressed TTM EBITDA after charges, not a premium valuation. Stellantis shows n/a. Stellantis shows -106.92% (source figure) on a $12.0bn market cap; left out so one distressed peer doesn't flatten the chart. The source shows n/a for Stellantis.

Scenario stress test

Reasoned from the bull/bear drivers above. The model column comes from the scenario overlays (Base case + shock).

Scenario Effect Mechanism Magnitude Model Δ value vs Base ($/sh)
S1 Fast equity crash − A high-beta (1.4) cyclical de-rates; no operating channel Med −$5.70
S2 Slow bear / recession − Volume and price fall, ~35% decrementals, trough multiple. ~63% of Base − Bear ($38.82) on purpose: a two-year dip, not a permanent share and margin reset High −$24.60
S3 Rapid rate shock − Higher discount rate, and auto-loan affordability hits volume and mix High −$11.35
S4 Slow rate grind − Same channels, slower Med −$5.18
S5 Soft-landing cuts + Cheaper auto credit lifts volume and truck mix; the cyclical re-rates High +$12.60
S6 Recession-driven cuts − Volume and pricing cuts outweigh rate relief High −$10.35
S7a Credit liquidity shock − Spread gap raises GM Financial's funding cost and hits the multiple; automotive net cash limits it Med −$7.17
S7b Slow default cycle − Weaker subprime auto credit cuts volume. GM Financial credit losses are outside the model, which holds it at book Med −$5.95
S8 Stagflation − Commodity (already ~$2bn) and wage inflation with weaker volume High −$10.24
S9a Dollar spike + A weaker peso cuts Mexican production costs; small GMI translation loss Low +$0.64
S9b Dollar slide − Mirror of S9a; the peso was a 2026 headwind Low −$0.65
S10 Melt-up + Low-multiple cyclical re-rates in a risk-on market Low +$3.80
S11 Energy supply shock − A fuel spike shifts mix away from full-size trucks and SUVs, GM's profit pool Med −$7.98
S12 Mega-cap/AI derating + Rotation into cheap cyclicals without a recession Low +$2.37

Currently active/on watch per the playbook: S3 partially active (10Y 4.99% on 10-27, just under the 5% price leg; pace legs short); S8, S10, S11 on watch (Brent ~$114).

Model value change vs Base, by scenario
S2 Slow bear / recession−$24.60S3 Rapid rate shock−$11.35S6 Recession-driven cuts−$10.35S8 Stagflation−$10.24S11 Energy supply shock−$7.98S7a Credit liquidity shock−$7.17S7b Slow default cycle−$5.95S1 Fast equity crash−$5.70S4 Slow rate grind−$5.18S9b Dollar slide−$0.65S9a Dollar spike+$0.64S12 Mega-cap/AI derating+$2.37S10 Melt-up+$3.80S5 Soft-landing cuts+$12.60

What would change the call

Upgrades if: the FY2027 guide (late January 2027) holds EBIT-adjusted near $15bn with GMNA margin of at least 9%, or a US–Mexico deal keeps USMCA preferential access and cuts the tariff cost below $2.5bn a year. Either moves value toward the bull case. Downgrades if: Q4 2026 US share falls below 15.5%, with full-size truck share below 30%, or the FY2027 guide implies EBIT-adjusted below $13bn, or a trade outcome pushes the tariff cost above $4bn a year.

Watch items

GM moves from NYSE to Nasdaq on 2026-11-17, keeping the symbol (8-K, 2026-10-27).

Sources