Has the GM Rally in 2025 Gone Too Far or Is There Still Value Left?

Simply Wall St.12-07 09:23

Wondering if General Motors is still a value play after its big run up, or if you have already missed the best of the upside? This breakdown is designed to help you separate genuine value from simple ...

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This breakdown is designed to help you separate genuine value from simple ...</p>\n\n<a href=\"https://simplywall.st/stocks/us/automobiles/nyse-gm/general-motors/news/has-the-gm-rally-in-2025-gone-too-far-or-is-there-still-valu\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"LU0130103400.USD","symbol_name":"Natixis Harris Associates Global Equity RA USD","start_time":0,"source_url":"https://simplywall.st/stocks/us/automobiles/nyse-gm/general-motors/news/has-the-gm-rally-in-2025-gone-too-far-or-is-there-still-valu","article_id":"2589878670","we_media_id":null,"thumbnails":["https://images.simplywall.st/asset/company-cover/61206100-main-header/1585186889695"],"rights":{"source":"simplywall_highlight","url":"https://simplywall.st/stocks/us/automobiles/nyse-gm/general-motors/news/has-the-gm-rally-in-2025-gone-too-far-or-is-there-still-valu","rn_cache_url":null,"directOrigin":true},"url":"https://stock-news.laohu8.com/highlight/detail?id=2589878670","pubTimestamp":1765070631,"columns":[],"sourceInfo":{"source_id":"simplywall_highlight","name":"Simply Wall St."},"weMediaInfo":null,"summary":"Wondering if General Motors is still a value play after its big run up, or if you have already missed the best of the upside? 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This breakdown is designed to help you separate genuine value from simple momentum. GM shares closed at $76.05 after climbing 3.4% over the last week, 10.6% over the past month, and an impressive 48.0% year to date, building on 43.9% gains over 1 year, 105.0% over 3 years, and 88.0% over 5 years. Much of this strength has been tied to investors rotating back into legacy automakers that are executing on EV strategies, capital returns, and cost discipline, along with shifting sentiment toward cyclical value names in general. Broader market optimism about easing inflation and interest rate expectations has also supported autos, giving moves like GM's more fundamental backing than a short lived relief rally. On our framework GM currently scores a 5/6 valuation check, suggesting the market may still be underpricing parts of the story. Next we will walk through the key valuation approaches that lead to that score, as well as a more nuanced lens on what fair value really means for long term investors.  General Motors delivered 43.9% returns over the last year. See how this stacks up to the rest of the Auto industry. AdvertisementApproach 1: General Motors Discounted Cash Flow (DCF) Analysis A Discounted Cash Flow model estimates what a company is worth by projecting the cash it can generate in the future and then discounting those cash flows back to today in dollar terms. For General Motors, the 2 Stage Free Cash Flow to Equity model starts with last twelve months free cash flow of about $13.4 billion, then applies analyst forecasts for the next few years before extrapolating longer term trends. Analysts currently project GM to be generating around $9.5 billion in free cash flow by 2029, with further moderate growth assumed through 2035 based on Simply Wall St estimates once analyst coverage thins out. All those future cash flows are discounted back to a single present value, giving an estimated intrinsic value of $96.38 per share. Compared with the recent share price of $76.05, the DCF implies GM is about 21.1% undervalued, suggesting the market is still pricing in a fair amount of caution despite stronger cash generation. Result: UNDERVALUED Our Discounted Cash Flow (DCF) analysis suggests General Motors is undervalued by 21.1%. Track this in your watchlist or portfolio, or discover 911 more undervalued stocks based on cash flows. GM Discounted Cash Flow as at Dec 2025 Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for General Motors. Approach 2: General Motors Price vs Earnings For profitable businesses like General Motors, the price to earnings ratio is a useful way to gauge how much investors are willing to pay for each dollar of current profits. A higher PE can be justified when markets expect faster earnings growth or see the company as relatively low risk, while slower growth or higher uncertainty usually calls for a lower, more conservative multiple. GM currently trades on a PE of about 14.9x, below both the broader Auto industry average of roughly 18.6x and the peer group average of around 24.8x. On the surface that suggests the market is still applying a discount to GM relative to many competitors, despite the strong share price performance and improving fundamentals. Simply Wall St’s Fair Ratio framework goes a step further by estimating what PE multiple GM should trade on given its specific mix of earnings growth, profitability, industry positioning, size and risk profile. This proprietary Fair Ratio for GM is 20.8x, notably higher than the current 14.9x. That indicates investors are still not fully rewarding GM for its earnings power and outlook, even after the recent rally. Result: UNDERVALUED NYSE:GM PE Ratio as at Dec 2025 PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1450 companies where insiders are betting big on explosive growth. Upgrade Your Decision Making: Choose your General Motors Narrative Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple framework where you write the story behind your numbers by stating how you think a company like General Motors will grow its revenue, earnings and margins, and then linking that story to a financial forecast and ultimately a fair value estimate. On Simply Wall St, Narratives are an easy, accessible tool on the Community page used by millions of investors. They allow you to quickly see how your view of GM compares with others by lining up each Narrative’s Fair Value against today’s share price to decide whether it looks like a buy, hold or sell. Because Narratives automatically update when new information such as earnings, news or guidance hits the market, your forecast and Fair Value stay in sync with reality rather than becoming a static snapshot that goes stale. For example, one GM Narrative on the platform might lean bullish, assuming tariff relief, strong EV execution and rising software revenue justify a Fair Value near the top of the current $38 to $80 analyst range. Another more cautious Narrative might emphasize EV headwinds, capital intensity and competitive pressure to arrive closer to the low end of that band, giving each investor a clear, personalized basis for action. Do you think there's more to the story for General Motors? Head over to our Community to see what others are saying! NYSE:GM Community Fair Values as at Dec 2025  This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    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\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.New: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. 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