Down 10% After Fantastic Earnings, This Ultra-Cheap Stock Is a Screaming Buy

General Motors (NYSE: GM) reported strong fourth-quarter earnings, as well as excellent 2025 guidance, but the stock took a dive after the results were released. Now, the giant automaker trades for a rock-bottom valuation of just over four times forward earnings.

To be fair, the stock isn't exactly down for no reason whatsoever. There are certainly some valid concerns investors should be aware of. But this is a massively profitable business that's executing nicely on its strategy, and here's why the stock could be a steal at the current price.

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There's a lot to like about GM's results

If you look at General Motors' fourth quarter results and forward guidance, it might seem odd that the stock fell by nearly 10% the day after the numbers were released.

On the headline numbers, GM handily beat expectations on both the top and bottom lines. Revenue grew by 11% year over year in the fourth quarter, and excluding some one-time charges related to its China operations and Cruise restructuring, earnings grew by 55% on a per-share basis.

Not only are GM's sales strong, but they are doing so with significantly lower incentive spending than the average automaker. It maintained the overall No. 1 position in U.S. sales, as well as the number one share in full-size SUVs, full-size pickups, and several other key categories.

The electric vehicle business continues to be one of the most impressive in the industry, with higher EV sales in the second half of 2024 of any company besides Tesla (NASDAQ: TSLA). Over the past year alone, GM has increased its share of the U.S. EV market from 6.5% to 12.5%. Looking ahead, GM expects to sell 300,000 EVs in 2025, which would be 59% more than 2024. Overall, General Motors' U.S. market share increased throughout the year, ending in Q4 at its highest level since 2018.

Buybacks continue to progress, and GM met its goal of fewer than 1 billion outstanding shares at the end of 2024. Plus, the company is improving its balance sheet, paying off $750 million in debt early in December and aiming to pay off $1.75 billion in maturing automotive debt this year.

Looking ahead, GM's 2025 guidance calls for another strong year. It calls for earnings per share in the range of $11 to $12. At the current share price, this means General Motors trades for just 4.3 times forward earnings. That isn't a typo. Furthermore, the automaker projects adjusted earnings before interest and taxes of $14.7 billion at the midpoint of its guidance, and that was $700 million more than analysts had expected.

So why is General Motors down?

The decline isn't necessarily due to anything in GM's earnings report. Instead, it appears related to regulatory uncertainty surrounding tariffs and EV incentives, as well as fears of slowing or challenging EV sales. One analyst from Bernstein wrote that the company's guidance "leaves no room for errors." And General Motors' CFO clarified that the guidance doesn't consider any regulatory changes, so it could end up being too rosy of an outlook if tariffs are implemented.

Having said that, the fact is that GM is doing an excellent job of executing on its growth plans and of generating billions in free cash flow. Even with the threat of tariffs, General Motors looks tremendously cheap after reporting stellar earnings.

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Matt Frankel has positions in General Motors. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends General Motors. The Motley Fool has a disclosure policy.