Key Takeaways:
General Motors Co. returned $30 billion to shareholders through buybacks since 2021, retiring 500 million shares, a Barron's stock pick said.
"The business is producing significant free cash flow, and management is enhancing per-share value by repurchasing shares at a discount to our estimate of intrinsic value," Joe Pittman, an investment analyst at Oakmark, said.
GM generated $53 billion in free cash flow over the past five years. Its market capitalization stands at about $75 billion, down from a peak of almost $100 billion in late 2021. The stock closed at $79.58 on Wednesday, up about 40 percent over five years. Shares trade at roughly 6.5 times estimated 2026 earnings, compared with the S&P 500's 22 times. The company's free-cash-flow yield of 14 percent far exceeds the index's roughly 3 percent.
The automaker earned $12.7 billion in operating profit in 2025, down from $14.9 billion a year earlier, as tariffs caused a mini-downturn for the US auto industry. Automotive free cash flow fell to $10.6 billion from $14 billion. GM is currently executing a $6 billion share repurchase and raised its quarterly dividend to 18 cents from 15 cents, yielding about 0.9 percent.
On Tuesday, GM Defense and Lockheed Martin Corp. announced a memorandum of understanding to collaborate on strengthening the US defense industrial base. The partnership will focus on supply chains, advanced manufacturing and production capacity. GM plans to invest $9 billion in capital expenditures and $7 billion in research and development this year, while Lockheed is investing $9 billion by 2030 to increase ammunition production.
Citi analyst Mike Ward rates GM shares a Buy with a $131 price target, implying 55 percent upside. Barron's Al Root set a $135 target, citing improving affordability as price increases moderate and wages rise.
The buyback program and new defense venture give GM multiple paths to per-share value growth even if its market capitalization stays flat. Investors will watch the USMCA trade pact review in July, which could introduce tariff volatility for the sector.
This article is for informational purposes only and does not constitute investment advice.
