Bull of the Day: General Motors (GM)

General Motors is trading near an all‑time high (~$77) after a >40% YTD rally while still trading cheaply at roughly 7x forward earnings and under 1x forward sales, supported by strong results, a $6bn buyback program and a 25% dividend increase. Operational momentum includes U.S. EV sales up 105% YTD to over 144,000 units (Chevrolet Equinox EV >25,000), a Q3 EPS beat ($2.80 vs. $2.28) and modest upward EPS revisions for FY25/FY26 despite an expected FY25 dip and a projected FY26 rebound to $11.51. Strategic catalysts—China restructuring that included a Shenyang plant closure and ~$2.6–2.9bn equity write‑down plus ~$2.7bn charges, investments in Cruise, and a lithium JV at Thacker Pass with Lithium Americas (now partly supported by a 5% U.S. government stake)—strengthen GM’s EV supply chain and value case, though execution and regional risks remain.

Analysis

General Motors is trading near an all-time high of roughly $77 after a >40% year-to-date rally while still showing a low valuation of about 7x forward earnings and under 1x forward sales, supported by a resumed $6 billion buyback program and a 25% dividend increase in 2025. Recent financials underpin the move: GM has beaten Zacks EPS consensus for 13 consecutive quarters and reported Q3 EPS of $2.80 versus $2.28 (a ~23% beat), driving upward EPS revisions for FY25 and FY26 over the last 60 days.

Operational momentum is concentrated in EVs where U.S. sales have risen 105% YTD to over 144,000 units, with the Chevrolet Equinox EV accounting for more than 25,000 units and making GM the second-largest domestic EV seller behind Tesla. This market share gain and the emphasis on EV product rollout are primary drivers of investor optimism and justify part of the multiple expansion despite broader industry competition.

Strategic actions carry both upside and execution risk: GM took $2.6–$2.9 billion equity write-downs in China and recorded ~$2.7 billion in restructuring charges while closing a Shenyang plant to reallocate capacity toward EVs and Cruise autonomous efforts. The Thacker Pass lithium JV with Lithium Americas, aided by a 5% U.S. government stake in LAC, is a potential supply-chain catalyst, but investors should monitor project timelines, China restructuring outcomes and the projected FY25 EPS dip (~2%) before the FY26 rebound to $11.51 (consensus-backed +11%).

Key Decisions for Investors

• Consider adding or initiating a measured long position given the low forward multiples (≈7x earnings, <1x sales) and clear EV/capital-return catalysts, but size exposure to reflect execution risk and recent rapid YTD appreciation.
• Monitor near-term indicators including monthly U.S. EV deliveries (Equinox volumes), upcoming quarterly EPS guidance and the trajectory of FY25 EPS revisions to validate the projected FY26 rebound to $11.51.
• Watch outcomes from the China restructuring (cost savings vs. sales impact) and progress on the Thacker Pass JV with Lithium Americas, as delays or additional write-downs would be material to the supply-chain thesis.
• Use the resumed $6bn buyback and higher dividend as balance-sheet support for the thesis, but consider hedging or trimming on any sharp valuation rerate since the stock has already appreciated >40% YTD.