We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
GM's 16th Straight Earnings Beat: Is the Stock a Buy After Q2 Results?
Read MoreHide Full Article
Key Takeaways
General Motors delivered its 16th straight earnings beat and raised full-year 2026 guidance.
GM's truck and SUV strength, pricing discipline and software growth continue to support earnings.
General Motors still faces tariff costs, EV restructuring charges and high capital spending pressures.
General Motors (GM - Free Report) delivered another strong quarter, posting its 16th consecutive earnings beat in the second quarter of 2026. Adjusted earnings of $3.57 per share rose 41.3% year over year and topped the Zacks Consensus Estimate by 14.06%. Revenues increased 1.9% to $48.03 billion and surpassed the consensus estimate by 3.15%.
General Motors Company Price, Consensus and EPS Surprise
Backed by solid execution and disciplined pricing, management also increased full-year 2026 guidance. Adjusted EBIT guidance was raised to $14-$16 billion from $13.5-$15.5 billion. Adjusted earnings are now projected to be $12-$14 per share, up from the prior range of $11.50-$13.50. The adjusted automotive free cash flow forecast was lifted to $9.5-$11.5 billion from $9-$11 billion.
Investors welcomed the upbeat results, sending GM shares up roughly 5% yesterday. Over the past year, shares of GM have risen 51%, outperforming peers like Ford (F - Free Report) and Tesla (TSLA - Free Report) . While Tesla will report results today after market close, Ford will release its quarterly earnings on July 28.
1-Year Price Performance Comparison
Image Source: Zacks Investment Research
General Motors benefits from its U.S. market leadership. The upcoming next-generation pickup cycle and added full-size SUV capacity could provide additional earnings momentum. So, is the stock worth buying at current levels? Or do near-term headwinds warrant a more cautious approach? Let's dig deeper.
What's Working in GM's Favor?
General Motors continues to execute well across its core business. Its biggest strength remains the North American truck and SUV franchise, where disciplined pricing and a profitable product mix continue to support earnings. Unlike many automakers that have relied on heavy discounts to stimulate demand, General Motors has kept incentives below the industry average for more than three years. This helped GM North America's adjusted EBIT margin recover to 8.6% in the second quarter and 9.3% in the first half, returning to management's target range of 8%-10%.
The upcoming launches of the next-generation Chevrolet Silverado and GMC Sierra, along with expanded full-size SUV production and increased U.S. manufacturing capacity, should support earnings growth over the next two years. Reflecting this confidence, management raised its 2026 earnings guidance and expects 2027 results to exceed 2026.
GM is also building higher-margin revenue streams beyond vehicle sales. OnStar subscriptions continue to grow, while Super Cruise is expanding across more vehicle models. Management expects software-related recognized revenues to exceed $3 billion this year, with deferred revenues approaching $7.5 billion. The company is also seeing improving profitability in China following restructuring, while businesses such as GM Energy, GM Defense and GM Insurance provide additional long-term growth opportunities.
Strong cash generation has enabled continued shareholder returns, with $6.3 billion of adjusted automotive free cash flow generated in the first half and $2.8 billion returned through share repurchases.
Key Risks Investors Should Watch
Despite these strengths, several near-term headwinds remain. Tariffs, commodity inflation and rising onshoring costs are expected to pressure margins through the remainder of 2026. GM still expects gross tariff exposure of $2.5-$3.5 billion this year. Commodity inflation, including logistics, is expected between $1.2 billion and $1.7 billion in 2026, an improvement from its previous outlook but still a meaningful drag on profitability.
The launch of next-generation pickups is likely to weigh on fourth-quarter production and profitability. The electric vehicle business also remains a drag. GM has incurred nearly $11 billion of EV-related restructuring charges since the second half of 2025, highlighting the challenges of aligning production with softer-than-expected EV demand. Although the largest cash outflows appear to be behind the company, profitability in the EV segment remains elusive.
Finally, GM continues to invest heavily in future growth. Planned capital expenditures of $10-$12 billion this year should strengthen its long-term competitive position, but they also reduce financial flexibility if vehicle pricing weakens, product launches are delayed or macroeconomic conditions deteriorate.
GM’s Valuation & Estimates Check
Despite the rally, GM appears undervalued now. The company is trading at a forward earnings multiple of 5.83, lower than its closest peer, Ford. Tesla, meanwhile, continues to trade at a significantly higher valuation, reflecting investor expectations for its AI and autonomous driving businesses rather than its core automotive operations.
GM's P/E F12M Vs. TSLA & F
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for GM’s 2026 and 2027 EPS implies year-over-year growth of 22% and 11%, respectively. The EPS estimates for 2026 and 2027 have moved up by 3 cents and 2 cents, respectively, over the past seven days.
How to Play General Motors Stock Now
General Motors remains one of the better-positioned legacy automakers, backed by a strong truck franchise, disciplined pricing and improving software economics. Its valuation also leaves little room for concern, trading at a meaningful discount to peers. However, tariffs, persistent EV-related costs and elevated capital spending are likely to temper earnings expansion over the next few quarters.
While the long-term story remains intact, the current risk-reward appears fairly balanced. With a Zacks Rank #3 (Hold), the stock is worth holding, but not compelling enough to chase after its recent rally.
View the Zacks #1 Rank List
Image: Bigstock
GM's 16th Straight Earnings Beat: Is the Stock a Buy After Q2 Results?
Key Takeaways
General Motors (GM - Free Report) delivered another strong quarter, posting its 16th consecutive earnings beat in the second quarter of 2026. Adjusted earnings of $3.57 per share rose 41.3% year over year and topped the Zacks Consensus Estimate by 14.06%. Revenues increased 1.9% to $48.03 billion and surpassed the consensus estimate by 3.15%.
General Motors Company Price, Consensus and EPS Surprise
General Motors Company price-consensus-eps-surprise-chart | General Motors Company Quote
Backed by solid execution and disciplined pricing, management also increased full-year 2026 guidance. Adjusted EBIT guidance was raised to $14-$16 billion from $13.5-$15.5 billion. Adjusted earnings are now projected to be $12-$14 per share, up from the prior range of $11.50-$13.50. The adjusted automotive free cash flow forecast was lifted to $9.5-$11.5 billion from $9-$11 billion.
Investors welcomed the upbeat results, sending GM shares up roughly 5% yesterday. Over the past year, shares of GM have risen 51%, outperforming peers like Ford (F - Free Report) and Tesla (TSLA - Free Report) . While Tesla will report results today after market close, Ford will release its quarterly earnings on July 28.
1-Year Price Performance Comparison
General Motors benefits from its U.S. market leadership. The upcoming next-generation pickup cycle and added full-size SUV capacity could provide additional earnings momentum. So, is the stock worth buying at current levels? Or do near-term headwinds warrant a more cautious approach? Let's dig deeper.
What's Working in GM's Favor?
General Motors continues to execute well across its core business. Its biggest strength remains the North American truck and SUV franchise, where disciplined pricing and a profitable product mix continue to support earnings. Unlike many automakers that have relied on heavy discounts to stimulate demand, General Motors has kept incentives below the industry average for more than three years. This helped GM North America's adjusted EBIT margin recover to 8.6% in the second quarter and 9.3% in the first half, returning to management's target range of 8%-10%.
The upcoming launches of the next-generation Chevrolet Silverado and GMC Sierra, along with expanded full-size SUV production and increased U.S. manufacturing capacity, should support earnings growth over the next two years. Reflecting this confidence, management raised its 2026 earnings guidance and expects 2027 results to exceed 2026.
GM is also building higher-margin revenue streams beyond vehicle sales. OnStar subscriptions continue to grow, while Super Cruise is expanding across more vehicle models. Management expects software-related recognized revenues to exceed $3 billion this year, with deferred revenues approaching $7.5 billion. The company is also seeing improving profitability in China following restructuring, while businesses such as GM Energy, GM Defense and GM Insurance provide additional long-term growth opportunities.
Strong cash generation has enabled continued shareholder returns, with $6.3 billion of adjusted automotive free cash flow generated in the first half and $2.8 billion returned through share repurchases.
Key Risks Investors Should Watch
Despite these strengths, several near-term headwinds remain. Tariffs, commodity inflation and rising onshoring costs are expected to pressure margins through the remainder of 2026. GM still expects gross tariff exposure of $2.5-$3.5 billion this year. Commodity inflation, including logistics, is expected between $1.2 billion and $1.7 billion in 2026, an improvement from its previous outlook but still a meaningful drag on profitability.
The launch of next-generation pickups is likely to weigh on fourth-quarter production and profitability. The electric vehicle business also remains a drag. GM has incurred nearly $11 billion of EV-related restructuring charges since the second half of 2025, highlighting the challenges of aligning production with softer-than-expected EV demand. Although the largest cash outflows appear to be behind the company, profitability in the EV segment remains elusive.
Finally, GM continues to invest heavily in future growth. Planned capital expenditures of $10-$12 billion this year should strengthen its long-term competitive position, but they also reduce financial flexibility if vehicle pricing weakens, product launches are delayed or macroeconomic conditions deteriorate.
GM’s Valuation & Estimates Check
Despite the rally, GM appears undervalued now. The company is trading at a forward earnings multiple of 5.83, lower than its closest peer, Ford. Tesla, meanwhile, continues to trade at a significantly higher valuation, reflecting investor expectations for its AI and autonomous driving businesses rather than its core automotive operations.
GM's P/E F12M Vs. TSLA & F
The Zacks Consensus Estimate for GM’s 2026 and 2027 EPS implies year-over-year growth of 22% and 11%, respectively. The EPS estimates for 2026 and 2027 have moved up by 3 cents and 2 cents, respectively, over the past seven days.
How to Play General Motors Stock Now
General Motors remains one of the better-positioned legacy automakers, backed by a strong truck franchise, disciplined pricing and improving software economics. Its valuation also leaves little room for concern, trading at a meaningful discount to peers. However, tariffs, persistent EV-related costs and elevated capital spending are likely to temper earnings expansion over the next few quarters.
While the long-term story remains intact, the current risk-reward appears fairly balanced. With a Zacks Rank #3 (Hold), the stock is worth holding, but not compelling enough to chase after its recent rally.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here