GM vs. F: Which Legacy Automaker is a Stronger Play Now?

General Motors GM and Ford F have long been rivals in the American auto industry but which one is the better investment today? Or, given economic uncertainty and tariff concerns, is either stock worth buying now? Both automakers have shown resilience and weathered economic storms in the past. Both possess ample liquidity and are navigating the EV transition. Let’s take a closer look at their fundamentals, growth prospects and challenges.The Case for General MotorsWith its hot-selling brands — namely Chevrolet, Buick, GMC, and Cadillac — General Motors retained its title as the top-selling automaker in the United States in 2024, with its full-year market share rising 30 basis points to 16.5%. Annual earnings spiked 38% to a record $10.60 per share. Encouragingly, the company expects 2025 EPS in the range of $11-$12 per share. General Motors is advancing well in its electrification journey. In the final quarter of 2024, GM’s EV portfolio became “variable profit positive.” The company produced 189,000 EVs last year and aims to build 300,000 in 2025. It expects its EV operating losses to reduce by about $2 billion this year. Also, General Motors’ deals with Vianode, Lithium Americas, LG Chemical, POSCO Chemical and Livent have boosted its EV supply chain, aligning with its long-term electrification goals.General Motors’ restructuring efforts in China have begun to yield results. It reported positive equity income in China in the last quarter of 2024, excluding $5 billion in restructuring costs and targets to turn around its China business to profitability this year.GM hit its $2 billion cost-cutting target by 2024 and expects $1 billion in annual savings from halting robotaxi development and refining its autonomous strategy. It exited 2024 with total automotive liquidity of $35.5 billion — including $21.7 billion in cash. The company returned $7.6 billion in dividends and buybacks last year. In February, GM announced a 25% hike in its dividend and also authorized a $6 billion buyback program ($2 billion of which will be ASR to be completed by the second quarter of 2025). On the flip side, General Motors anticipates a slight decline in ICE wholesale volume in North America, though EV growth should partially offset the impact. The company also expects pricing to decline by 1-1.5% year over year, reflecting potential higher incentives or a moderation in ATPs, which could put some pressure on margins. The Case for FordFord was the third-best seller in the United States in 2024, having sold slightly more than 2 million vehicles. Its strong lineup, including F-series trucks and SUVs, is set to grow with new Maverick, Bronco and Expedition Navigator launches. Continued strength across all three domains — vehicles, software and physical services — is boosting Ford’s Pro business. Its increasing focus on software technology and services business will be a major driver. Ford ended 2024 with around $28 billion in cash and roughly $47 billion in liquidity. Encouragingly, Ford reduced net cost by $500 million in the second half of 2024 and has identified $1 billion in product design cost reductions for 2025. Ford’s attractive dividend yield of more than 6% adds to its appeal. However, near-term concerns are huge. Ford’s Model e segment continues to struggle amid stiff competition, pricing pressure and significant costs associated with new-generation EV development. After having incurred losses of $4.7 billion in its EV business in 2023, Ford’s loss from Model e widened to $5.07 billion in 2024, exacerbated by ongoing pricing pressure and increased investments in next-generation EVs. Discouragingly, the company expects segmental loss in the band of $5-5.5 billion this year.The Ford Blue division seems to be losing momentum. The company anticipates 2025 EBIT of $3.5-4 billion from the Blue segment. This implies a decline from $5.3 billion generated in 2024. Ford expects to sell fewer ICE vehicles compared to last year. Additionally, a shift in product mix and foreign exchange headwinds will drag profits.Last month, Ford announced that it intends to inject up to €4.4 billion ($4.8 billion) into its German operations, aiming to reduce debt and improve competitiveness.The European auto industry is under pressure from rising costs, weak demand and growing competition from Chinese EV makers. Only time will tell if Ford’s capital injection can revitalize its European business.How Do Zacks Estimates Compare for F & GM?The Zacks Consensus Estimate for Ford’s 2025 sales and EPS implies a year-over-year decline of 4% and 27%, respectively. The EPS estimates have been trending southward over the past 60 days. Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for General Motors’ 2025 sales implies a year-over-year decline of 4%. EPS estimates, however, call for a year-over-year uptick of 9%. EPS estimates have been trending northward over the past 60 days. Image Source: Zacks Investment ResearchGeneral Motors’ Valuation Attractive than FordGeneral Motors is trading at a forward earnings multiple of 4.06X, below its median of 4.96X over the last three years. F’s forward earnings multiple sits at 7.25X, above its median of 6.44X over the last three years. Image Source: Zacks Investment ResearchAre F & GM Prepared for Tariff Woes?Trump's 25% tariff on auto imports is set to disrupt the auto supply chain industry. It will impact both companies but GM looks slightly better prepared. The company cut international inventory by 30%, reducing exposure to sudden cost spikes. It is also optimizing supply chains with logistics partners. Meanwhile, Ford CEO Jim Farley warned that tariffs would bring “a lot of cost and a lot of chaos” to the U.S. auto industry. These tariffs are expected to increase raw material costs and finally translate to the high cost of vehicles, thereby derailing demand and affecting sales and profits.ConclusionGeneral Motors’ successful cost-cutting initiatives, positive EV momentum and improving results in China make it a more resilient player in the face of market challenges. GM is proving itself to be operationally more efficient than its crosstown rival, with effective strategies to adapt to the tariff environment.In contrast, Ford has been struggling with significant losses in its EV segment and faces greater headwinds from pricing pressure and increasing competition. Additionally General Motors’ valuation is more appealing and its upwardly revised estimates instill confidence. Given these factors, GM seems a better pick than Ford now.While GM carries a Zacks Rank #3 (Hold), Ford is currently #5 Ranked (Strong Sell).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ford Motor Company (F): Free Stock Analysis Report General Motors Company (GM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks