General Motors (GM): What to Expect Before Earnings
2026-07-12 · By Lubin Danilo, founder of Lubin Investment
GM: see the full analysis on Lubin Investment
General Motors reports second-quarter 2026 earnings on July 21. My screener gives it 6 out of 10: a stock trading at barely 5 times its available cash, but with a very thin net margin, a classic trait of the auto industry. Here's what I'm watching before the announcement.
The context: a legacy automaker facing the electric transition
General Motors remains one of the world's largest automakers, with brands like Chevrolet, GMC, Cadillac, and Buick. The group has spent several years navigating a costly transition toward electric vehicles, while still relying heavily on its most profitable gas-powered models, particularly its North American pickups and SUVs, which fund most of its EV investment.
What my screener says: a very low price, fragile profitability
In my 10-criteria screener, General Motors scores 6 out of 10. The most concerning figure: a net margin of just 1.4%, extremely low even for a sector known for thin margins. On the other hand, two positive signals stand out: free cash flow per share growth reaches 31.7% over the recent measured period, and the share count is shrinking sharply, 10.4% a year, thanks to massive buybacks. Fewer shares against rising available cash is a sign of capital discipline worth noting.
An important nuance on General Motors' debt
Net debt relative to free cash flow comes in at 7.32 times, a figure that looks alarming at first glance. It needs nuance, though: a large share of this debt comes from GM Financial, the group's auto financing arm, which lends to customers to fund vehicle purchases or leases. This kind of asset-backed debt (backed by the loans and lease contracts themselves) doesn't carry the same risk profile as pure corporate debt raised to fund industrial operations. This nuance doesn't make the figure harmless, but it explains in part why automakers nearly all show debt ratios that look high compared to other sectors' criteria.
The price: one of the lowest multiples in my screener
The stock trades at only 4.9 times its annual free cash flow (P/FCF), one of the lowest multiples I cover. My model puts a reasonable buy price at $157.72, against a current price of $77.85. Such a gap should be interpreted with caution: it partly rests on the assumption that buybacks continue at the recently observed pace, never a given in a sector as cyclical as auto manufacturing. That's not a reason to ignore the figure, but a reason to weigh it against the sector's cyclical risk.
What to watch in the July 21 results
General Motors reports second-quarter 2026 earnings on July 21, before market open. Consensus expects earnings per share around $3.28. Key things to watch: margins on North American pickups and SUVs (the group's real profit engine), losses at the electric vehicle division, and the pace of buybacks announced for coming quarters.
- General Motors reports Q2 2026 earnings on July 21, mid-transition toward electric vehicles
- 6 out of 10 in my quality screener: very thin net margin (1.4%), but massive buybacks (-10.4%/yr)
- High net debt (7.32 times free cash flow), partly tied to auto financing (GM Financial), a different risk profile from classic corporate debt
- The stock trades at only 4.9 times its available cash, one of the lowest multiples in my screener
- Watch on July 21: margins on North American pickups and losses at the EV division
FAQ
Why is General Motors' net margin so low?
The auto industry is structurally low-margin: high production costs, massive investment in plants and R&D, intense competition. A 1.4% net margin is low in absolute terms, but remains within the norm for traditional automakers.
Is General Motors' debt a concern?
A large share comes from GM Financial, its auto financing arm, backed by assets (loans and lease contracts to customers). It's not the same as pure corporate debt, even though the overall ratio remains high and worth watching.
Does a P/FCF of 4.9 times mean General Motors is a good deal?
It's a statistically very low multiple, but it needs to be weighed against the cyclical nature of the auto sector and the assumption of continued buybacks that partly underpins my calculated buy price.
Should you buy General Motors before its July 21 earnings?
The price looks statistically low, but profitability remains fragile and the sector is cyclical. This is not personalized investment advice, do your own research.
GM: see the full analysis on Lubin Investment
About the author
Written by Lubin Danilo, founder of Lubin Investment. A self-taught individual investor, I find fundamental analysis fascinating, and it has delivered excellent results. For three years now, my performance has beaten the S&P 500. But analyzing every stock took too much time: sites with incomplete data, calculation methods and criteria never aligned with mine. And spotting the best stocks was just as time-consuming, even with my own well-defined checklist. So I put my software development background to work to build this software, base my investment strategy on its results, and share it with people who share the same passion as me. It judges a company's quality and its price separately, using criteria drawn from the financial literature (Warren Buffett, Michael Mauboussin, Aswath Damodaran).