General Motors (GM 1.80%) has been around for quite some time, with its founding dating back to 1908. This is one of the biggest car makers on Earth, with trailing-12-month revenue of $187 billion and 1.6 million units sold just in the latest quarter. Popular models include the Chevy Equinox and Silverado.
What has this well-known automotive stock done for investors?
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GM shares are having their moment
Over the past five years, GM shares have produced a total return of 101% (as of Dec. 15), which includes dividends. This gain exactly matches the performance of the S&P 500. Investors can be pleased with seeing their starting capital double in half a decade.
The Detroit car manufacturer has crushed the benchmark index with total returns of 56% and 117% in the past 12 months and three years, respectively. GM stock is currently trading at its all-time high, demonstrating the market's bullishness.
Traditional automakers' days of dominating the industry were thought to be over, since the belief was that electric vehicles would take over the market rapidly. This proved not to be the case. And it has somewhat reduced what was a key risk factor for GM, which generates the vast majority of its revenue from gas-powered cars.
GM's share price has been lifted by an impressive streak of financial results that have exceeded Wall Street estimates. In the past 13 straight quarters, the business has reported earnings per share (EPS) that came in better than analysts' forecasts. This was true in the most recent period (the third quarter of 2025, ended Sept. 30), where GM posted adjusted EPS of $2.80 and revenue of $48.6 billion, with demand for its SUVs through the roof. And management upped the full-year guidance. The stock soared 15% on the day of the news.
Another tailwind working in GM's favor has been the leadership team's capital allocation policy. The business produces positive free cash flow, allowing it to return capital to shareholders in the form of stock buybacks. In the past 12 months, GM has shrunk its outstanding share count by 15%.
NYSE: GM
Key Data Points
The stock's cheap valuation reflects industry challenges
Even though the stock has trounced the market in the past year, the valuation is still very attractive. Investors can scoop up shares of GM at a forward price-to-earnings ratio of 6.9.
While buying the stock might appear to be a compelling proposition, it's worth highlighting the market's potential concerns. Like its peers, GM must deal with cyclical demand trends, huge capital expenditures, low margins, and intense competition. This should keep enthusiasm in check.
