THE BARATELLI INSTITUTE
· Mentoring at Scale
THE BARATELLI INSTITUTE
· Mentoring at Scale
Take GM Financial out at book value and the market prices America's largest automaker at about twice its EBITDA and a 25% free-cash-flow yield. The board's answer on October 20: a $20 billion buyback, 31% of the company at today's price.
The car business is valued on EV/EBITDA, with GM Financial added at book and $7.3B of automotive net cash added back. Every turn of automotive EBITDA is worth $22.79 a share, 30% of the price.
2.0x on $16.0B of auto EBITDA. Tariffs, costs and pricing take $3.2B out.
2.5x on $19.2B, the 2026 run-rate. Below Ford's 2.7x auto-only multiple.
4.0x on $20.5B. Tariff relief, pickup launch done, smaller EV losses.
Take-private value near $96.64 at a 15% sponsor IRR with no growth.
Screens add GM Financial's $113 billion of debt to GM's EV and show 9.3x. That debt funds car loans, not the car business. Separate the two and the number changes completely.
| Market cap (843.5M × $76.11) | $64,203 |
| Less GM Financial at book | ($16,521) |
| Automotive equity | $47,682 |
| Plus automotive debt | $15,799 |
| Less automotive cash and securities | ($23,116) |
| Automotive enterprise value | $40,365 |
| Automotive EBITDA, 2026E | $19,228 |
| EV / automotive EBITDA | 2.10x |
EBITDA = EBIT-adjusted guide midpoint $15.0B − GM Financial EBT ≈ $2.6B + automotive D&A ≈ $6.8B. Including $8.0B of net pension and OPEB underfunding, the multiple is 2.51x.
Screen multiples include each captive finance arm's debt. The auto-only rows remove it. Source: stockanalysis.com, 10/21/2026; Ford Q2 2026 and GM Q3 2026 releases. Tesla shown at 150.7x, bar capped.
$30,435M of adjusted automotive free cash flow from Q3 2024 to Q3 2026. 80% of the cash deployed went to buybacks, and the share count fell 22.8%.
Bars: GM's adjusted figure. Dots: before GM's add-backs (OCF − capex).
Approved October 20, 2026, multi-year, no expiration. No accelerated repurchase announced yet; GM used ASRs in November 2023 ($10B) and February 2025 ($2B).
Sixteen senior notes, $14,900M of principal at a 5.70% weighted coupon, trading at 95.3 with a 6.11% yield to worst. Automotive cash covers them 1.55x. The stock yields about 19 points more than the company's own bonds.
General Motors Company notes only; GM Financial funds itself. Ratings: Moody's Baa2, S&P BBB, Fitch BBB (positive). Prices: TradingView, October 2026.
| Note | Principal | Price | YTW |
|---|---|---|---|
| 6.800% Oct 2027 | $1,000 | 101.26 | 5.15% |
| 4.200% Oct 2027 | $750 | 99.16 | 5.12% |
| 5.350% Apr 2028 | $750 | 100.16 | 5.21% |
| 5.000% Oct 2028 | $750 | 99.39 | 5.32% |
| 5.400% Oct 2029 | $1,000 | 99.66 | 5.52% |
| 5.625% Apr 2030 | $750 | 99.94 | 5.64% |
| 5.600% Oct 2032 | $1,250 | 98.85 | 5.83% |
| 5.000% Apr 2035 | $750 | 91.77 | 6.27% |
| 6.250% Apr 2035 | $500 | 99.66 | 6.30% |
| 6.600% Apr 2036 | $1,250 | 101.83 | 6.32% |
| 5.150% Apr 2038 | $1,000 | 89.43 | 6.47% |
| 6.250% Oct 2043 | $1,500 | 94.17 | 6.83% |
| 5.200% Apr 2045 | $1,250 | 82.62 | 6.87% |
| 6.750% Apr 2046 | $750 | 98.54 | 6.88% |
| 5.400% Apr 2048 | $750 | 83.61 | 6.87% |
| 5.950% Apr 2049 | $900 | 89.42 | 6.88% |
| Total | $14,900 | 95.33 | 6.11% |
The Q3 2026 print beat, the free-cash-flow guide went up, and the stock fell 6.8% to $77.09 on about four times normal volume. Tariffs ($2.5–3.5B, tracking low), commodity and memory-chip costs (~$2B), the Q4 pickup changeover (~35,000 units) and $11.2B of EV charges since mid-2025 are inside the EBIT guide; the EV charges sit outside it, with their cash cost in the FCF add-backs.
| $ millions | Q3 2026 | Q3 2025 | Change |
|---|---|---|---|
| Revenue | $50,015 | $48,591 | +2.9% |
| EBIT-adjusted | $4,106 | $3,376 | +21.6% |
| GM North America EBIT-adjusted | $3,592 | $2,506 | +43.3% |
| EPS-diluted-adjusted | $3.70 | $2.80 | +32.1% |
| Adjusted automotive FCF | $5,882 | $4,201 | +40.0% |
| 2026 adjusted auto FCF guide | $11.5–12.5B | prior $9.5–11.5B | raised |
I spent the early part of my career in bank loan review, and the first thing you learn is to look at who gets paid first. GM's bondholders are calm: investment grade, prices near par, yields around 6%. The stock is priced like the company is in trouble. When the debt says one thing and the equity says another, I trust the people with the senior claim. GM doesn't need to invent anything here. It needs to build the new trucks, pay the tariff bill it has already sized, and keep doing what it has done for two years: turn cash into a smaller share count. At about two times EBITDA, every share it retires is a bargain. Phil Baratelli, CPA · Founder, The Baratelli Institute
About the Institute. The Baratelli Institute publishes practitioner-grade case studies on public companies and deals, written by Philip A. Baratelli, CPA, so readers can learn the method and apply it to the next ticker. www.baratelliinstitute.com