If you’re staring at General Motors stock and wondering whether now is the right time to jump in, you’re not alone. After all, GM has been on a noticeable run, climbing 16.6% in just the last week and racking up a striking 30.1% gain year-to-date. Those kinds of returns tend to catch investors’ eyes, especially when they’re backed by something more substantial than a wave of market optimism.
Recently, GM has benefited from a string of developments that have shifted how investors view its growth potential and long-term risk. News about expanded electric vehicle investments, strategic partnerships in autonomous driving, and an uptick in global vehicle deliveries have all underscored a story of transformation beyond GM’s traditional strengths. These initiatives have not just generated headlines; they seem to have had a real effect on sentiment, pushing the stock higher and signaling that Wall Street might be reevaluating the company’s future earnings prospects.
But before getting swept up by share price momentum, it pays to ask the core question: is the stock actually undervalued, or is the market getting ahead of itself? GM currently holds a solid valuation score of 5 out of 6, which means it checks nearly every box analysts look for when identifying undervalued companies. That is impressive, but the real insight comes from understanding what these valuation checks actually mean. In the next section, we will walk through the different ways professionals assess whether GM is undervalued, and at the end, I will share a more comprehensive way to make sense of it all.
Why General Motors is lagging behind its peers
Approach 1: General Motors Discounted Cash Flow (DCF) Analysis
The Discounted Cash Flow (DCF) model estimates a company’s value by projecting its future cash flows and then discounting them back to their value today. This approach tries to calculate what General Motors is truly worth, based on the money it is expected to generate in the years ahead.
For General Motors, the most recent twelve months of Free Cash Flow come in at about $13.4 billion, a strong number that forms the model’s starting point. Analyst estimates project this annual cash flow to remain robust, with 2029 expectations at roughly $8.4 billion. After five years of analyst inputs, projections for the next several years are extended by trend analysis to complete a full decade outlook. These long-range forecasts help capture the underlying profitability of the company’s business over time.
All these cash flows are added up and discounted to the present, resulting in an estimated intrinsic value per share of $85.45. Currently, GM trades at a meaningful 21.8% discount to this modeled fair value. This suggests the market may be undervaluing GM’s potential to deliver steady cash to shareholders in the years ahead.
Result: UNDERVALUED
Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for General Motors.
GM Discounted Cash Flow as at Oct 2025
Our Discounted Cash Flow (DCF) analysis suggests General Motors is undervalued by 21.8%. Track this in your watchlist or portfolio, or discover more undervalued stocks.
Approach 2: General Motors Price vs Earnings
The Price-to-Earnings (PE) ratio is one of the most widely used valuation tools for profitable companies like General Motors. It shows how much investors are willing to pay for each dollar of current earnings. For a company with consistent profits and solid future visibility, PE is often a clearer measure of value than revenue or book value metrics.
What counts as a “normal” PE depends on expectations for growth and risk. Companies anticipated to grow faster, or with less business risk, usually command higher PE ratios. Those facing uncertainty or slower growth tend to earn lower multiples. This context is key for evaluating where GM stands today.
General Motors currently trades at a PE of 13.3x, notably below both the auto industry average of 18.8x and its peer group at 19.0x. To refine this picture, we turn to Simply Wall St’s “Fair Ratio,” a proprietary multiple that factors in GM’s earnings growth, profit margins, industry dynamics, company size, and risk profile. This Fair Ratio for GM is 19.7x, indicating what its PE would likely be in a balanced market context. The benefit of this approach is that it tailors the valuation target directly to GM’s specific outlook, rather than using the broad brush of a sector average.
Comparing GM’s actual PE to the Fair Ratio shows the stock is trading at a meaningful discount, suggesting its shares are undervalued based on earnings power and fundamentals.
Result: UNDERVALUED
NYSE:GM PE Ratio as at Oct 2025
PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.
Upgrade Your Decision Making: Choose your General Motors Narrative
Earlier we mentioned that there’s an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is simply your “story” about General Motors: it’s your view of what’s driving the business, how it might perform in the future, and what you think is a fair value for the stock.
Unlike traditional methods that only look at numbers, Narratives connect the dots between a company’s journey (like electric vehicle rollouts, production shifts, or new revenues), translate your expectations into forecasts, and automatically calculate fair value based on those assumptions. On Simply Wall St’s Community page, you can easily build and share a Narrative in minutes, making this powerful tool accessible to everyone, not just finance pros.
Narratives help you know not just what a company is worth, but why. Most importantly, they show how new information, such as earnings or news, can shift your fair value in real time. They are perfect for comparing your price target to today’s market price so you can decide if now is the right time to buy or sell.
For example, some users see a bullish case for GM, believing that EV adoption and digital services will drive rapid profit growth and setting their fair value well above current prices. Others are more cautious and assign a lower fair value due to competition, costs, and regulatory uncertainty.
Do you think there’s more to the story for General Motors? Create your own Narrative to let the Community know!
NYSE:GM Community Fair Values as at Oct 2025
This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.
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