General Motors (GM) shares rallied more than 15% today after the legacy automaker posted better-than-expected results for its fiscal third quarter (Q3) and raised its guidance for the full year.
The earnings release confirms GM’s strategic pivot to its highly profitable truck and SUV business while right-sizing EV investments is proving financially sound.
Including post-earnings gains, General Motors stock is up more than 60% versus its year-to-date low.
Beyond the headline numbers, there were several updates in the quarterly print that warrant owning GM stock. For example, management now expects a more manageable hit from tariffs in 2025.
According to General Motors, the potential impact of new levies could end up being as low as $3.5 billion, down significantly from its previous estimate of up to $5.0 billion.
GM expects to offset about 36% of these costs through various mitigation strategies. These include the U.S. government’s tariff relief initiative, which provides a 3.75% MSRP offset through 2030.
A dividend yield of 0.89% makes up for another great reason to own General Motors stock for the long-term.
General Motors’ core business remains exceptionally strong, achieving its highest third-quarter U.S. market share (17%) since 2017.
The car manufacturer has maintained impressive pricing discipline, with incentives at just 4.0% of average transaction prices compared to the industry average of 6.9%.
Moreover, the NYSE-listed giant’s restructured operations in China have returned to profitability, indicating improved international performance.
All in all, trading at a forward price-earnings (P/E) multiple of around 6x despite a notable post-earnings surge, GM shares present a compelling investment opportunity for those in it for the long haul.
Wall Street also remains bullish on General Motors shares.
According to Barchart, the consensus rating on GM stock currently sits at “Moderate Buy” with price targets going as high as $92, indicating potential upside of another 40% from here.
