Can GM’s Steel Supply Shift Signal Stronger Value for Investors in 2025?

If you’re eyeing General Motors stock and wondering whether now is the moment to get in, you’re not alone. GM has been on a steady climb that’s turning heads, up over 23% in the past year and nearly double over the last five. Recent weeks saw even more momentum, with the stock rising more than 15% in the past 90 days and almost 7% in the last month. That kind of move usually signals that something interesting is happening, whether it reflects confidence in long-term growth or a shift in how much risk investors are willing to take on.

Several recent news developments help explain the activity. On the supply side, GM and other U.S. automakers secured longer-term steel contracts, possibly hedging against future inflation and bringing stability to their production costs. Meanwhile, GM’s renewed focus on autonomous vehicles, including a push to rehire former Cruise team members, suggests the company is not backing down from significant bets on the future of mobility. Add in plans to source batteries from major suppliers, even if that means navigating tariffs, and you see a company actively shaping its destiny at a pivotal moment for the auto industry.

Given all this, is the stock actually undervalued, or are markets already pricing in these opportunities? GM currently scores a 5 out of 6 on our valuation checklist, meaning it clears nearly every hurdle analysts use to spot a bargain. Of course, those methods only tell part of the story. Next, we'll break down each valuation approach used, and at the end, share a perspective that goes even deeper into what makes a stock truly attractive.

General Motors delivered 23.2% returns over the last year. See how this stacks up to the rest of the Auto industry.

Approach 1: General Motors Cash Flows

The Discounted Cash Flow (DCF) model estimates a company’s value by projecting its future cash flows and discounting them back to today’s dollars. This approach offers a practical view of what a business is really worth, stripped of short-term market noise.

General Motors is currently generating roughly $13.1 billion in free cash flow over the last twelve months. Analysts project steady growth in these cash flows, with forecasts reaching $11.6 billion by 2035. Using a two-stage DCF model that factors in this growth, the model estimates GM’s intrinsic value at $92.20 per share.

Compared to the recent market price, the DCF suggests GM stock is trading at a 38.4% discount. This means the current price is well below the calculated fair value. According to these calculations, GM is notably undervalued on this metric.

Result: UNDERVALUED

Our DCF analysis suggests General Motors is undervalued by 38.4%. Track this in your watchlist or portfolio, or discover more undervalued stocks based on DCF analysis.

Approach 2: General Motors Price vs Earnings

The Price-to-Earnings (PE) ratio is a popular way to value established, profitable companies like General Motors. It reflects how much investors are willing to pay today for each dollar of a company’s earnings. This makes it a fast and easy way to compare stocks across the same sector.

The “right” PE ratio for any business depends on a mix of factors, including expectations for future growth, how stable those earnings are, and the risks the company faces. Typically, higher expected growth or lower risk can justify a higher PE. On the other hand, if the market sees uncertainty or slow growth ahead, the multiple may be lower.

GM’s current PE ratio is just 8.28x. When compared to the auto industry average of 19.61x, and the peer group’s even higher average of 59.64x, this appears modest. Importantly, our proprietary Fair Ratio, which adjusts for GM’s size, profitability, and risk profile, comes in at 14.39x. This is well above where the stock trades today and suggests the market may be undervaluing GM’s earnings potential relative to its fundamentals.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your General Motors Narrative

Beyond ratios and forecasts, the most powerful investment tool is a Narrative—your own story for why a company is worth more (or less) than its current price, built on your assumptions about future revenue, profits, and margins.

A Narrative connects the dots between what's happening at General Motors, such as new EV launches, battery deals, or global competition, and how these factors might realistically affect long-term earnings. This ultimately leads to your personal fair value for the stock.

Within the Simply Wall St platform and its global community, Narratives make it easy for investors of any experience level to combine their research and outlooks into a clear, data-driven valuation. This allows you to see at a glance whether GM is undervalued or overpriced today.

As news and results emerge, Narratives update automatically to help you respond more quickly as the situation evolves.

For example, one GM investor might build a bullish Narrative, expecting EV demand and new tech to drive earnings up to $12.4 billion and a fair value near $80 per share. In contrast, a more cautious investor could anticipate headwinds and estimate a value closer to $38. This illustrates how your own perspective, not just the consensus, shapes your investment decisions.

Do you think there's more to the story for General Motors? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data 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 financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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