Morningstar

GM Earnings: Commodity Headwinds Increase, as Does Buyback Program

We think GM is showing confidence in its future performance.

The General Motors Company (GM) logo is seen displayed on a smartphone screen.
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Securities in This Article
General Motors Co
(GM)

Key Morningstar Metrics for General Motors

  • Fair Value Estimate
    : $86.00
  • Morningstar Rating
    : ★★★
  • Morningstar Economic Moat Rating
    : None
  • Morningstar Uncertainty Rating
    : High

What We Thought of General Motors’ Earnings

General Motors’ GM third-quarter earnings saw adjusted diluted EPS of $3.73 beat the LSEG consensus, and the company announced a $20 billion share repurchase program with no expiration. The stock fell over 9% during Oct. 20 trading.

Why it matters: We think GM had a strong quarter, with total company adjusted EBIT margin up 130 basis points year over year to 8.2%, GM North American margin up 250 basis points to 8.7%, and adjusted automotive free cash flow up 40.0% to $5.9 billion.

  • Management increased 2026 guidance for adjusted automotive free cash flow and adjusted diluted EPS (the latter’s midpoint is now $13.25, up from $13.00), but we think the market did not like GM saying that since July its annualized commodity inflation is an incremental $1.0 billion-$1.5 billion.
  • GM will not give 2027 guidance until it announces fourth-quarter earnings on Jan. 27, but recent market enthusiasm for 2027 EBIT growth will likely not be realized. These new headwinds for things like steel and copper suggest, at best, flat or low growth 2027 EBIT but higher EPS on buybacks.

The bottom line: We are leaving our $86 fair value estimate per share in place for no-moat GM. We expect that GM will battle inflationary forces all of next year. Management has shown high skill in offsetting headwinds such as tariffs, but there’s only so much cost-cutting a firm can do.

  • 2027 variables that the company can control, namely product, look promising for 2027 with the new generation full-size pickup trucks coming to showrooms in late 2026. First-quarter 2027 will be weaker than it already is, as GM’s three pickup plants won’t all be producing yet.
  • We like GM continuing its aggressive buyback program, with shares outstanding down 45% since 2015 and the diluted share count since year-end 2022 down 39%. We think the new $20 billion program will be fully utilized, and that GM is showing confidence in its future performance.

Editor’s Note: This analysis was originally published as a stock note by Morningstar Equity Research.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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