General Motors (GM) investment Quality Rating (B)

(B) | Consumer Discretionary | Automobile Manufacturers
By: Old York Financial
A Private Principal Research Report

the verdict

Old York Financial has assigned General Motors (GM) an Operational Quality (B) Rating. GM is a "Structural Pivot." In 2025, the company reported a massive 55% drop in net income to $2.7 Billion, primarily due to a $7.2 Billion special charge to realign its EV capacity with reality. It earns a (B) because while its North American truck business is a gold mine, the "China Leak" and the sheer cost of its electric transformation have created a "Clogged Pipe" in its profitability. For the Principal, GM is a "Work in Progress" the dividend hike and $6 Billion buyback are the only things keeping the chassis from rattling during this transition.

the old york analysis

owner earnings: the truck-fueled cash pump Despite the accounting carnage, GM's ability to pull cash out of the ground via internal combustion engines (ICE) remains elite. We look past the one-time charges to see the real "Flow."

• 2025 Automotive Operating Cash Flow: $18.73 Billion

• (-) Capital Expenditures: ($9.20 Billion)

• (+) Depreciation & Amortization: $12.50 Billion (Estimated)

• OLD YORK OWNER EARNINGS: $22.03 Billion

Analyst Note: On a cash basis, GM is a monster. Its Adjusted Automotive Free Cash Flow of $10.6 Billion proves that the "Old Engine" (Silverado/Sierra) is perfectly funding the "New Engine." The company is using this cash to retire shares at a record pace, reducing share count by 14% in one year. This is the only reason EPS remained flat while total net income collapsed.

operational efficiency

• 5-Year ROIC (Avg): 4.28%

• 5-Year EPS CAGR: N/A

• 5-Year Price CAGR: 7.41%

• Share Change (5Y): -39.74%

• Analyst Note (The Efficiency Gap): A 5.1% ROE is dangerously low. It reflects the weight of $129 Billion in debt (mostly GM Financial) and the massive impairments taken in Q4. GM is currently a "Low-Yield Machine" that is essentially liquidating its old business to buy a new one.

growth & market dominance

• 2025 Consolidated Revenue: $185.0 Billion (-1.3% YoY).

• Market Share: GM held a dominant 17.3% share in the U.S., led by 2.85 million vehicles sold.

• The "China Reset": After years of bleeding, GM finally achieved four quarters of profitable equity income in China following a brutal restructuring. The "China Leak" has been patched, but the pipe is much smaller now.

• The Software Moat: "OnStar" and "Super Cruise" subscribers grew significantly (Super Cruise up 80%). This "High-Margin Digital Oil" is the only path to a future (AA) rating.

the fortress check

• Total Assets: $281.3 Billion.

• Cash & Marketable Securities: $21.7 Billion.

• Total Debt: $129.7 Billion (Debt-to-Equity of 2.05x).

• Capital Allocation: The Board approved a $6.0 Billion buyback and a 20% dividend hike to $0.18/quarter.

• Solvency: GM has high leverage, but its Interest Coverage is technically negative on a GAAP basis due to the Q4 loss. However, its adjusted EBIT covers interest comfortably.

final determination

Rating: Old York Operational Quality (B)

Classification: The Heavy-Duty Transition.

GM is a (B) because it is currently a "Binary Bet." If its software and EV realignment work, it’s an (A). If the $10 Billion annual CapEx continues to yield a 5.1% ROE, it risks a further downgrade. The machine is currently being held together by the massive cash flow from North American trucks and a aggressive share buyback strategy.

Disclaimer: Old York Financial operates privately as a principal and sells corporate advisory. Old York Financial is not an accountant, a financial advisor, a broker, an agent, a lawyer, or a portfolio manager. This report is for informational purposes only.