General Motors (GM) Could Be 12% Undervalued After Unifor Contract Deal

General Motors (GM) stock is in focus after Unifor members in Canada voted to ratify new three year contracts that secure more than US$1 billion of investment and formalize higher wages and benefits.

For investors, the recent Unifor deal fits into a broader story of renewed interest in General Motors. At a latest share price of US$87.76, the stock has a year to date share price return of 8.37%. The 1 year total shareholder return of 51.91% and 3 year total shareholder return of 174.48% point to strong longer term momentum. Recent contract wins and partnerships, such as the extended Chevrolet tie up at Daytona and GM's defense vehicle bids, have helped keep this in focus.

Spot opportunities with similar momentum and contract driven stories by scanning our curated list of 47 high quality undervalued stocks alongside General Motors.

Bulls see General Motors as a contract-backed value story with strong recent returns, while bears worry that higher labor costs and cyclical risks could limit upside. Which side does the current valuation actually support next?

Most Popular Narrative: 12.3% Undervalued

At a last close of $87.76 versus a narrative fair value of $100.04, the most followed view sees General Motors trading at a discount that hinges on how new software, defense, and services businesses evolve over the next few years.

GM is leveraging enhanced digitalization, AI, and over the air diagnostics to improve vehicle quality and manufacturing efficiency, which should drive down warranty costs, boost customer loyalty, and improve net margins over time.

Read the complete narrative. Read the complete narrative.

Want to see what is behind that margin story? The fair value hinges on modest revenue growth, a step change in earnings power, and a future profit multiple that assumes more than just cars. Curious which specific earnings and margin paths the narrative leans on?

Result: Fair Value of $100.04 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, you still need to weigh risks such as persistent tariff headwinds and higher warranty costs that could pressure General Motors margins and challenge this upbeat narrative.

Find out about the key risks to this General Motors narrative.

Another View: General Motors Through The P/E Lens

There is a different read on General Motors if you look at the P/E math. The stock trades on 41.5x earnings, compared with 13.1x for the global auto industry and a fair ratio of 26.3x. That premium points to clear valuation risk if expectations reset.

For a closer look at what this gap could mean for future returns, have a look at the valuation breakdown next: See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

Seen enough of the bullish and cautious takes on General Motors to sense a split view on the stock? Act quickly and review both sides of the story by looking at the 2 key rewards and 4 important warning signs

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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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