General Motors Company (GM)

Conclusion

General Motors designs, builds and sells trucks, crossovers, cars and parts under brands such as Chevrolet, Cadillac and GMC, and it runs a financing arm, GM Financial. At 89.65 USD on 9 November 2026, the company has a market capitalisation of 76.11 billion USD and an enterprise value of 177.05 billion USD.

The verdict is undervalued. The fair value band runs from 149.36 to 224.03 USD with a midpoint of 186.69 USD, a margin of safety of 108.3% at the current price. The discounted cash flow gives 289.96 USD per share at a discount rate of 11.96%, and the fair value from historical multiples is 83.43 USD. Against their own ten-year medians, the price-to-earnings ratio of 19.39 and the EV/EBITDA of 15.30 are both well above their medians of 7.66 and 7.25, so the valuation leans on cash flow rather than on earnings. The reverse DCF implies growth of -10.9% a year, against revenue growth of 8.6% a year delivered over five years.

What holds the case up is cash generation: free cash flow after stock-based compensation is 16.50 billion USD on a trailing basis, the share count has fallen 7.6% a year over five years, and the company beat earnings estimates in all eight of the last quarters. What would break it is the balance sheet and returns. Net debt to EBITDA is 8.72, the Altman Z-score of 1.20 sits in the distress zone, and ROIC of 2.4% is below a WACC of 7.2%.

Financial health

The colour of financial strength is red, pulled down by the net debt to EBITDA of 8.72 and the Altman Z-score of 1.20. The current ratio of 1.09 and the interest coverage of 6.83 are neutral, and the quick ratio is 0.42 with a debt to equity ratio of 2.05. The Altman model was built for manufacturers, which fits General Motors. Its Z-score of 1.20 places the company in the distress zone. The insolvency risk is low, about 0.9% by the estimate of the Ohlson model over one to two years. The estimate rests on figures as of 31 December 2025, so it is a rough guide rather than a forecast. The company's debt sits high relative to its earnings, and that is the main point to watch.

Earnings quality

The colour of earnings quality is yellow. Free cash flow conversion is 420.2% on a trailing basis, but over five years it is -27.5%, so the recent figure is flattered by a weak history. The accrual ratio of -8.6% is a good sign, since cash earnings exceed reported earnings. The Piotroski score is 5 out of 9, and the Beneish M-score of -2.53 indicates that manipulation is unlikely. The company does not report its stock-based compensation to revenue ratio, so the dilution cost from that source is not available. The share count has fallen 7.6% a year over five years, which points to buybacks. Eight of eight earnings surprises were beats, averaging 12.5%. Current-year estimate revisions are slightly negative, with 11 downgrades against 5 upgrades in the last 30 days, while next-year estimates have risen slightly.

Profitability

The colour of profitability is red. The gross margin of 9.0% is well below its ten-year median of 17.5%, and the operating margin of 2.3% is below its median of 5.7%. The net margin of 2.1% compares with a median of 5.4%. Operating margin stability is 0.35, a weak reading for a cyclical manufacturer. Return on invested capital is 2.4%, against a WACC of 7.2%, and the given difference is -4.8%, which marks the company as destroying value. The five-year median of ROIC is 5.2%. Return on equity of 6.3% looks modest only because the company holds an equity multiplier of 4.60 (the 2025 figure) and an asset turnover of 0.66. Leverage therefore props up the return on equity, while the underlying return on capital stays below the cost of capital.

Growth

The colour of growth is yellow. Revenue has grown at 5.7% a year over three years, 8.6% over five years and 2.0% over ten years. Revenue rose in 5 of the 10 comparable years. Earnings per share have fallen over every period measured: -26.0% a year over three years, -9.1% over five years and -7.3% over ten years. Next year's earnings estimate implies growth of 9.9%. This is a recovery that analysts expect, but it would reverse a decade of falling per-share earnings. The gap between top-line growth and earnings growth is the central tension in this business.

Valuation

The colour of valuation is green, because the verdict is undervalued. Yet the multiples sit far above their own history: the price-to-earnings ratio of 19.39 has a ten-year median of 7.66, a premium of 153.0%, and EV/EBITDA of 15.30 has a median of 7.25, a premium of 111.1%. The price-to-sales ratio of 0.41 is 7.5% above its median of 0.38, and the price-to-book ratio of 1.21 is 5.8% below its median of 1.29. The free cash flow yield is 21.7%. The discounted cash flow gives 289.96 USD per share at a discount rate of 11.96%, with 45.0% of the value in the terminal value. The fair value band of 149.36 to 224.03 USD is built on fixed assumptions, including a 5% equity risk premium and capped growth. It is an order of magnitude, not a price target. The dividend yield is 1.56%, the forward yield is 0.82%, and the payout on free cash flow is 7.2%.

Risks

The main risk is the balance sheet. A net debt to EBITDA of 8.72 leaves little room if earnings fall, and an Altman Z-score of 1.20 signals distress, even though the Ohlson estimate of insolvency risk is low. Returns below the cost of capital mean that growth adds little value at present, with ROIC at 2.4% against a WACC of 7.2%. The five-year free cash flow conversion of -27.5% shows that cash generation has been inconsistent, so the strong trailing figure may not persist. Earnings per share have fallen over every period measured, and the valuation depends on the expected recovery. The stock-based compensation figure is not available. This analysis has no debt maturity schedule and no revenue breakdown by segment, so refinancing pressure and the mix of profits across regions cannot be assessed.