Evaluating General Motors After Amazon Tests BrightDrop EV Vans Amid 2025 Stock Surge

Thinking about buying, holding, or even adding more General Motors to your portfolio lately? You are definitely not alone. Shares of GM have been on a steady climb this year. Over just the last week, the stock gained 3.8%. That’s not a fluke either, with a 4.2% increase in the last 30 days, and an impressive 19.2% return year-to-date. Zoom out further and the gains look even better, with the stock up 33.2% in twelve months, 97.0% over three years, and a remarkable 108.0% over the last five years.

Part of this momentum comes despite some headwinds. For example, Honda recently announced plans to end U.S. production of its Acura ZDX EV with GM, a change that might have unnerved some investors. But positive signals keep coming. Amazon has been testing GM’s BrightDrop electric vans for its delivery fleet, and the company is discussing renewing its key joint venture in China. These developments reflect both ongoing transformation and underlying resilience at GM, painting a picture of a company that is both adapting and finding growth avenues.

What about value? GM is currently undervalued in 5 out of 6 major valuation checks, giving it a stellar value score of 5. That may catch the eye of value-focused investors. But how do these scores stack up, and what should you make of them? Let’s break down the numbers across different valuation methods. Also, there is a smarter way to look at GM’s true worth that we’ll touch on at the end.

Why General Motors is lagging behind its peers

Approach 1: General Motors Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company’s true worth by projecting its future cash flows and then discounting those cash flows back to today’s dollars. This approach helps investors understand what a business’s future earnings are worth in present terms.

For General Motors, the model uses current Free Cash Flow (FCF) of $13.05 billion as its foundation. Analyst estimates provide cash flow projections for up to five years, but beyond that, Simply Wall St extrapolates further growth using reasonable assumptions. By 2029, projected FCF reaches $8.7 billion, and by 2035, FCF could grow to $11.5 billion, all figures in dollars.

Taking these numbers into account, the DCF model arrives at an intrinsic value of $91.90 per share for GM. This is based on the “2 Stage Free Cash Flow to Equity” method, which considers both near-term analyst estimates and longer-term modeled growth.

With the current share price significantly below this intrinsic value, the implied discount stands at 33.4 percent. This suggests that General Motors stock is materially undervalued when looking purely at its future cash flow potential.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for General Motors.

Our Discounted Cash Flow (DCF) analysis suggests General Motors is undervalued by 33.4%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: General Motors Price vs Earnings (PE Ratio)

The Price-to-Earnings (PE) ratio is a common and reliable way to value profitable companies like General Motors because it directly compares the company’s share price to its actual bottom-line earnings. For businesses that consistently generate profits, the PE ratio can show whether the market is paying a reasonable price per dollar of earnings.

Determining what makes a “fair” PE ratio is not as simple as looking at a single number. Growth expectations, risks, profit margins, and even company size play a role. Fast-growing or lower-risk companies often command higher multiples, while slower-growing or riskier businesses tend to have lower PE ratios.

Currently, General Motors trades on a PE ratio of 8.9x. That is noticeably below the Auto industry average of 18.0x, as well as the peer average of 19.3x. However, comparing just to the industry or peers does not always give the full picture. That is where Simply Wall St’s proprietary “Fair Ratio” comes in. It refines the benchmark by blending expectations for GM’s earnings growth, profit margins, risks, and its place within the auto sector. In GM’s case, the Fair Ratio is 15.3x, which means the stock trades at a significant discount to what would be expected given its profile.

Because General Motors’ current PE ratio is well below its Fair Ratio, the shares appear undervalued based on this approach.

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

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is simply your story or outlook for a company, combining what you believe about its future revenue, profits, and margins with an easy financial forecast that leads to your own fair value estimate.

This approach links the company’s unique story, such as new product launches or strategic shifts, directly to numbers that drive valuation, making your investment reasoning clear and actionable. Narratives are easy to create and update on Simply Wall St’s Community page, so millions of investors can share or compare perspectives side by side.

By using Narratives, investors can see at a glance whether their Fair Value view signals that the stock is a buy, hold, or sell compared to its current market price. Narratives update automatically as news or earnings emerge, letting you adjust your expectations in real time and keep your decision-making grounded in the latest developments.

For example, some GM investors expect rapid EV adoption, higher margins, and set a bullish price target of $80, while more cautious users anticipate modest earnings and use a fair value near $38. Your Narrative simply reflects your own outlook and helps you decide what’s right for you.

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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