General Motors (NYSE:GM) has raised its full-year profit outlook twice this year. Its stock still trades at a multiple most companies would consider an insult.
That gap is the whole story. In its most recent report, covering the second quarter of 2026, the company’s adjusted earnings per share jumped to $3.57 from $2.53 a year earlier. GAAP earnings per share, the official accounting figure, moved the other way, falling to $1.41 from $1.91. Investors are being asked to believe one of those numbers more than the other. The business itself is simple to describe. GM builds and sells Chevrolet, GMC, Buick, and Cadillac vehicles, earns most of its profit in North America, and runs a lending arm, GM Financial, that finances the cars it sells. Yet, despite trading at a dirt-cheap multiple, the legacy automaker fails to make the cut among the 10 Best Undervalued Stocks to Buy in October. Whether the stock’s low price is a warning or an overlooked opening comes down to which set of earnings tells the truer story.
Where the Money Really Comes From
GM’s edge is scale in North America, its biggest profit center by far, and the region’s results show pricing power is holding. GM North America posted an 8.6% adjusted EBIT margin (earnings before interest and taxes, excluding one-time items) in the second quarter, up from 6.1% a year earlier
That’s a meaningful jump for a company whose top line barely moved. Revenue was roughly flat year over year, so the improvement came from earning more on each sale rather than from a bigger top line. That efficiency stands in stark contrast to crosstown rival Ford Motor, where even a major production surge leaves open the question of Ford Motor Company (F): Truck Production Rebounds Sharply, Can Sales Catch Up? While Ford fights to turn factory throughput into bottom-line profits, GM continues to squeeze significantly more profit out of its core North American business.
Cash That Backs Up the Headlines
Adjusted numbers are easy to dismiss until the cash shows up. GM’s adjusted automotive free cash flow reached $5.03 billion in the second quarter, compared with $2.82 billion a year earlier. That cash is going straight back to shareholders, even as the company maintains its spot among the 10 Best Battery Stocks to Buy According to Billionaires through its ongoing investments in next-generation cell manufacturing. GM spent $2.80 billion buying back its own stock in the first half of 2026, up from $2.01 billion in the same stretch last year. Fewer shares means each one claims a bigger slice of the profit. Management also lifted its 2026 EBIT-adjusted forecast to $14 billion to $16 billion, from $13.5 billion to $15.5 billion, and now expects adjusted EPS of $12 to $14. The next test arrives soon: GM reports third-quarter results next week.
Aren’t the EV Write-Downs a Red Flag?
They’re the main reason the GAAP numbers look so different. GM booked a $2,279 million charge for what it calls its EV strategic realignment in the second quarter alone, bringing the year-to-date total to $3,356 million. That pulled down the company’s GAAP outlook, too: full-year diluted EPS guidance fell to $8.98 to $10.98, from $10.62 to $12.62.
Skeptics have a fair point. Those charges reflect real money spent on electric vehicle plans that didn’t pay off, and a company that keeps setting aside unusual costs can flatter its results. GM’s sluggish top-line growth stands in stark contrast to electric vehicle pioneer Tesla, though investors debate whether that valuation gap is justified or whether buying Tesla (TSLA) is a $1 Trillion Robotics Gamble. While Tesla trades at a sky-high multiple betting on autonomous Cybercabs and humanoid robots, GM’s cheap price tag reflects deep skepticism that its traditional auto profits are being engineered rather than grown.
Still, a realignment is a cleanup, not a recurring expense. If the charges taper off, the gap between GAAP and adjusted earnings should narrow from the GAAP side up, not the adjusted side down.
A Bargain Price That Has Always Been Cheap
At 6.08 times forward earnings, as of October 12, GM trades at a steep discount to the sector’s 14.80 multiple. But the sector comparison overstates the case. GM’s own 5-year average P/E is 5.64, so the stock is actually a little pricier than its usual level. Automakers have long traded at low multiples because their earnings swing hard with the economy, and the market isn’t treating GM as an exception.
What could justify a higher number is growth. Analysts expect earnings per share to rise 11.58% in 2027. A business growing earnings at a double-digit pace while trading at a single-digit multiple is unusual, and it places GM alongside 10 Cheap Stocks That Will Go to the Moon According to Reddit. The catch is that the growth has to show up in GAAP results eventually, not just adjusted ones. Hedge fund interest slipped a little, with 75 funds holding the stock in the most recent quarter, down from 77 in the prior one. Short interest stands at 2.29% of the float, a sign of relatively limited bearish positioning.
Waiting on the GAAP Catch-Up
The evidence points to a stronger business than the multiple suggests. North American margins are rising, cash flow has climbed, and buybacks have stepped up. The discount to the sector looks wide, though less so against GM’s own history.
That setup suits patient, value-minded investors who can stomach cyclical swings. The picture would change if next week’s report shows fresh EV charges piling up, or if North American margins slip back toward last year’s levels. Either would suggest the adjusted story was running ahead of reality.
READ NEXT: Top 10 AI Stocks That Will Skyrocket and 2 Stocks Trump Bought in July Are Now Down 17% to 20%. Time to Buy?
