What we're left with are companies of relatively similar size. GM does about $150 billion in business a year, just $20 billion more than Ford. Both companies are profitable, albeit marginally so, with net income representing just 3-6% of sales.
The balance sheet of GM is much stronger, a debt-to-assets ratio of only a little more than 10%, against more than 50% for Ford. But it will probably take on some debt to take out the government's stake. The strength in both cases is operating free cash flow, which is about $10 billion/quarter at both companies.
Since the financial collapse, GM has been whittled down to four car lines - Chevrolet, Buick, Cadillac and GMC. Ford is trying to gain a second line under the Lincoln name, something it can run against Cadillac, but that's going to be problematic. (Is Eminem available?) Both companies now produce a full line of hybrid vehicles, and GM has the all-electric Volt.
Ford seems dedicated to meeting the 2025 CAFE standards, when cars need to get over 50 miles per gallon, through steady innovation. Its 2013 Fusion already gets 47 miles per gallon, it's bringing back the 3-cylinder engine in the Fiesta, it is bringing in a hybrid-only nameplate called C-Max. GM's line is broader, but it's still trying to define differentiation among Chevy, Buick and Cadillac - the cars are very similar. Ford has fewer eggs in its basket, but they are bigger eggs.
Looking at the two companies in September, our Brian L. Wilson called both good values. Since then both are up about 12%.
I bought Ford near its bottom, and have stuck with it through thin-and-thin. Once the government exits the scene, Interactive Buyside says GM has "deep value" thanks to its finance arm. But both are going to be rebuilding their finance infrastructure moving forward - I consider it a wash.
On balance, then, I'm going to stick with Ford. They're strong in China, their reputation was untarnished by the bailouts. But the similarities with GM are now going to be stronger than the differences. Will either ever gain a double-digit earnings multiple? Maybe not. But Ford now has a little dividend I think it will keep, I think it will deliver some yield.
Which do you prefer?
Disclosure: I am long F.