General Motors vs Ford: Investment Outlook Comparison for 2026

After a strong rally in 2025, investors are beginning to focus on the outlook for traditional automakers General Motors (GM) and Ford (F) in 2026. Last year, both companies’ stock performances far outpaced the broader market and beat most industry peers, including Tesla. Despite headwinds from slowing electric vehicle growth and cost pressures from tariffs under the Trump administration, both delivered earnings that exceeded expectations.

GM attracted investor attention with its strong cash flow generation and active buyback plans, while Ford was optimistic due to restructuring and cost control measures. Over the past year, GM’s stock rose 65%, hitting a record high above $80; Ford’s stock increased over 40%, approaching its 52-week high of $14. These results are impressive, but the key question is: can this momentum continue into the new year?

Electric Vehicle Strategy Divergence: Two Major Automakers’ Growth Paths

Although the U.S. electric vehicle market declined in Q4 2025 due to the expiration of the federal $7,500 tax credit, GM still delivered an impressive annual performance. GM sold a record 169,887 EVs last year, up 48% year-over-year, despite Q4 sales dropping from 43,982 units in the same period 2024 to 25,219.

GM remains the second-largest EV seller in the U.S., behind Tesla, with the Chevrolet Equinox EV becoming the best-selling non-Tesla EV model. Additionally, GM’s total annual sales grew 5.5% to 2.8 million units, maintaining healthy growth momentum.

In contrast, Ford’s EV performance was less impressive. As the third-largest EV seller in the U.S., Ford sold 84,113 EVs last year, only half of GM’s volume, and down 14% year-over-year (from 98,000 in 2024). Ford’s Q4 EV sales plummeted over 50% to 14,500 units. However, Ford’s total annual sales still increased 6% to 2.2 million units, marking its best year since 2019.

The main reason for the sales gap lies in product line breadth. Ford currently offers only three EV models in the U.S.: the F-150 Lightning pickup, Mustang Mach-E crossover, and E-Transit commercial vehicle. GM, on the other hand, has EV offerings across multiple brands including Chevrolet, GMC, and Cadillac, covering a broader range.

Financial Recovery Outlook: GM and Ford’s Earnings Rebound Potential

According to Zacks Investment Research forecasts, GM’s FY2025 earnings per share (EPS) are expected to decline 2% year-over-year to $10.33, a pullback from the record $10.60 in 2024. Looking ahead to FY2026, GM’s EPS could jump 14% to a new high of $11.81. Notably, over the past 60 days, estimates for GM’s FY25 and FY26 EPS have been revised upward, with FY26 up 6%, reflecting growing market confidence in its growth prospects.

GM’s annual revenue is projected to decrease slightly by 1% in FY25, with a small decline expected in FY26, but total sales will remain above $184 billion. The company will release its Q4 2025 financial results on January 27.

Ford faces greater pressure. FY2025 EPS is forecasted at only $1.08, down sharply from $1.84 in 2024, with tariffs impacting earnings by up to $250 million. Fortunately, if tariffs under the Trump administration ease in the second half, Ford’s FY26 EPS could rebound to $1.42. However, FY25 EPS estimates have been lowered over the past two months, and although FY26 estimates have modestly increased in the last 60 days, they still lag behind the $1.44 projected a month ago.

Ford’s annual revenue is expected to decline less than 0.5% in FY25, and by 2% in FY26 to $168.27 billion. Its Q4 financial report is scheduled for release on February 4.

Capital Efficiency Comparison: Who Knows How to Create Value

When evaluating automakers, return on invested capital (ROIC) is a key metric. However, due to the capital-intensive nature of the auto industry, both companies face relatively low ROIC realities. Manufacturing cars requires billions in fixed assets for factories, equipment, robotics, and supply chains.

Currently, GM and Ford are in long-term investment phases for EV transformation, which are time-consuming and costly, operating within a structurally low-margin industry environment. EV production further increases their capital outlays, and converting this capital into profits takes time, directly impacting ROIC.

Nevertheless, GM shows a relative competitive advantage here. GM’s ROIC stands at 4.6%, significantly higher than Ford’s 2.7%, and above the Zacks auto industry domestic average of 2%. This indicates GM is more efficient in capital allocation, though overall ROIC remains below the ideal 20%+ level.

Valuation and Returns: Key Metrics Investors Should Watch

Although both companies’ ROICs are well below the satisfactory 20% or higher, GM and Ford still offer value propositions for long-term investors. Both stocks trade at less than 11x forward earnings and pay dividends, which is better than many peers.

In terms of valuation, GM has a clear advantage. GM’s forward P/E is only 7x, compared to Ford’s 10x, both well below the Zacks auto industry domestic average of 14x. Moreover, recent upward revisions to GM’s EPS estimates further enhance its valuation appeal.

On the price-to-sales basis, like most of the domestic auto industry, GM and Ford trade at less than 1x forward sales, a ratio generally considered attractive below 2x.

In dividend yield, Ford has the edge. Its annual dividend yield is 4.23%, significantly higher than GM’s 0.72%. However, looking at dividend growth history, the difference is interesting: since resuming dividends post-pandemic, GM’s annual dividend has grown 20.46% over the past five years, while Ford’s growth is only 8.71%. This suggests that although Ford’s current yield is higher, GM’s dividend growth momentum is stronger.

Investment Conclusion: Who Is More Worth Allocating To — GM or Ford

Based on multiple dimensions, GM outperforms in several key metrics that investors care about. While the auto industry faces structural challenges like low ROIC, GM’s strong earnings momentum has earned it a Zacks Rank #1 (Strong Buy), whereas Ford is rated #3 (Hold).

For 2026 investment decisions, GM’s superior capital efficiency, more attractive valuation, and stronger earnings growth outlook provide more upside potential. Ford, despite showing positive restructuring results and operational improvements, still lags in short-term growth prospects and valuation attractiveness. Therefore, for investors seeking exposure to traditional automakers, GM is the more competitive choice.