General Motors improves outlook, stock has best growth in five years. Is it worth buying?

Automobile manufacturer General Motors markedly raised its forecast for the full year 2025, which led to a rally in its shares: they soared by 15%, which was the best growth in a day in five years. GM's reporting showed that the company is successfully adapting to the White House's policy changes: it managed to maintain profit growth and strengthen its market position despite the new emissions rules and the adjustment of subsidies for electric cars. Analysts believe that GM is "racing against the clock".

US automaker General Motors (GM) has raised its outlook for 2025. Adjusted earnings before interest and taxes (EBIT) are now expected to be $12-13 billion, up from the previous forecast of $10-12.5 billion. Adjusted EPS will be in the range of $9.75 to $10.5 (versus $8.25-10 in the previous forecast), and net income will be in the range of $7.7 billion to $8.3 billion.

At the same time in the third quarter (ended September 30), GM's adjusted earnings fell by 5.4% to $2.8 per share. However, the automaker exceeded analysts' consensus forecast of $2.27, Bloomberg reports . Revenue fell slightly - by 0.3% compared to the same period in 2024, to $48.6 billion. Net income fell by 57% to $1.3 billion.

General Motors shares soared 15.7 percent in trading on Oct. 21. This was their best growth during one day since March 2020, Bloomberg noted. The cost of securities rose to the maximum since the beginning of January 2022.

GM's optimism is due to rising sales of high-margin gasoline-powered SUVs and pickup trucks - models that bring the company more profit per vehicle, Bloomberg notes. Additionally, relaxed federal emissions requirements and duty exemptions on imported parts, extended by Donald Trump's administration through 2030, have helped. As CEO Mary Barra noted, this allows GM to use foreign parts to assemble cars in the U.S., reducing costs and increasing business profitability.

GM's earnings forecast for 2026 could be even higher than 2025, indicating a positive trend, Evercore analyst Chris McNally said in a note cited by Bloomberg. "I'm not sure anyone can pick on anything at all," McNally wrote. He maintains an Outperform rating ("above market" - essentially a buy recommendation).

"The overall impression is that the company is rushing full steam ahead in the context of those factors that management can control, and with increasing transparency of circumstances beyond management's control," agreed JPMorgan analyst Ryan Brinkman as quoted by Bloomberg.

With Tuesday's trading surge, General Motors shares are now worth 26% more than they were at the start of 2025, with the stock up 37% over the past three months.

According to MarketWatch, GM stock has a total of 29 ratings from analysts: 18 advise buy (14 Buy and four Overweight), eight recommend hold (Hold), and three suggest sell (one Underweight and two Sell).

This article was AI-translated and verified by a human editor