Is GM the Best Automaker to Invest in Now?

General Motors GM stock has often caught the attention of value investors, trading at relatively suppressed levels despite its robust financial metrics.

What has held GM shares back, you might ask, is the perception that the historic automaker won’t be able to sustain its dominance in an increasingly competitive and innovative market.

However, GM has continued to invest in electric vehicles (EVs) and autonomous driving through its subsidiary Cruise, which is lifting sentiment in regard to its long-term growth potential.

In fact, many analysts have become bullish on GM, reflecting growing confidence in the auto giant’s strategy and financial performance.

GM’s Record EV Sales

Adding to the notion that GM may be one of the best automakers to invest in at the moment and can sustain its dominance is that it’s currently the second-leading EV seller in the U.S., behind Tesla TSLA.

Edging Ford F and solidifying its #2 spot, GM reported today that it sold 66,501 EVs in the U.S. during Q3, more than doubling its EV sales from the prior year quarter and marking its highest quarterly EV sales ever.

Year to date, GM’s EV sales have surged 105% from 2024 to over 144,000 units sold. This has been led by its Equinox EV, with over 25,000 units sold, making it the best-selling non-Tesla EV in the U.S.

Furthermore, GM’s luxury Cadillac EVs have also been in high demand, with it noteworthy that the eye-catching surge during Q3 was partly driven by a rush to purchase EVs before the expiration of the $7,500 federal tax credit for EV owners on September 30. Notably, GM stated total U.S. vehicle sales were up 8% from Q3 2024.

Tracking GM’s Outlook

Following a multi-year peak for annual sales, GM’s top line is expected to contract 4% in fiscal 2025 and is projected to dip another 2% in FY26 to $175.47 billion.

On the bottom line, GM’s EPS is expected to descend from multi-year highs of $10.60 in FY24 to $9.44 per share this year. That said, FY26 EPS is projected to stabilize and rebound 2% to $9.66

GM’s Cheap Valuation

At around $61 a share, GM stock trades at just 6X forward earnings. This offers a distinct discount to its Zacks Automotive-Domestic Industry average of 13X and even Ford’s 10X forward earnings multiple, with Tesla at a very stretched 267X.

In terms of price-to-sales, GM trades at only 0.3X, which is roughly on par with Ford and slightly beneath the industry average of 0.7X, with Tesla at a high premium of 15X.

Analyst Upgrades

Despite the anticipated contraction to its top and bottom lines, analysts have become bullish on GM stock, with the company now forecasting a smaller decline in vehicle pricing in the U.S. of 1%-1.5% compared to previous forecasts of 2%-2.5%.

Quieting concerns of marketing costs and lower-margin EV production, analysts at JPMorgan JPM recently raised their price target for GM shares to $80 from a previous tag of $60, maintaining an overweight rating on future performance.

More intriguing, a slew of other notable firms have raised their targets for GM stock to over $70 as well, including analysts at Barclays BCS, Citigroup C, Goldman Sachs GS, and UBS UBS.

Rising +5% over the last month, and now up a very respectable +15% YTD, GM stock has blown past its current Average Zacks Price Target of $59.19 a share.

Bottom Line

As far as valuation is concerned, GM is certainly making the case for being the best domestic automaker to invest in, even ahead of Ford. And while market sentiment may still favor Tesla’s long-term growth potential, GM is the domestic leader in total auto sales and has become more attractive after resolidifying its #2 spot in EV sales.  

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This article originally published on Zacks Investment Research (zacks.com).

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