Investors quickly began to assess the possible threat that Chinese tariff-related retaliations might have on American automakers like General Motors (GM Quick QuoteGM - Free Report) and Ford (F Quick QuoteF - Free Report) . Some of these fears have been curbed in recent days, but now still looks like a good time to decide which of these two domestic auto powers offers the best value.

Both GM and Ford have fallen on relatively hard times over the last few years. This has forced the two U.S. automakers to look to the future and adopt new growth tactics, which includes entering the electric vehicle race.

With that said, the U.S. auto industry has become a bit more volatile recently as new entrants and international sellers continue to infiltrate the market. Nonetheless, GM and Ford are likely to keep paying dividends and presenting strong value for the foreseeable future.

However, investors who are attracted to buy-and-hold stocks like GM and Ford also understand the value of a diverse portfolio. This means they might only want to pick one of these two historic U.S. automakers.  

So which of these stocks is the better buy right now? Let’s take a closer look.

Valuation

Traditional value investors love to look at the price-to-earnings ratio to determine great buying opportunities. After all, buying a stock makes one a partial owner of that company, so investors are inherently interested in profitability.

Here is a look at the Forward P/E trend for GM and F over the last year:

As investors can see, Ford has consistently traded at a premium to GM over the last year. The gap between Ford and GM did shrink in October and a few other times over the last few months. This suggests that investors periodically perceived less of a difference between these two stocks. Yet, as it currently stands, GM is once again trading at a discount to Ford.

It is also worth noting that Ford and GM both offer investors strong value compared to their Zacks Sub Industry’s average Forward P/E of 11.

Performance

Value investors should also be interested in a stock’s recent price performance. For instance, if a stock has sold off significantly, its lower valuation might speak to a greater problem that has forced investors to flee.

Check out how GM and F have performed since this time last year:

As we can see, General Motors outpaced Ford for almost a full year. Investors should also note that GM was more resistant to February’s nearly market-wide downturn.

Zacks Rank

We demonstrated that both GM and Ford are relatively intriguing picks, but the best value plays are undervalued companies that also boast strong Zacks Ranks.

Ford is currently a Zacks Rank #3 (Hold) and sports an “A” grade for both Value and Growth in our Style Scores system. Meanwhile, General Motors is currently a Zacks Rank #1 (Strong Buy) and also rocks an “A” grade for Value and Growth.

Furthermore, our Zacks Rank system places a great deal of emphasis on earnings estimates and estimate revisions. Within the past 60 days, we have seen six revisions to GM’s full-year earnings estimates, with 100% agreement to the upside. During this same timeframe, Ford has earned two upward revisions along with one downward revision.

With all this said, it seems that General Motors is the more attractive stock based on its current valuation, positive analyst sentiment, and superior Zacks Rank.

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

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