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(FCAU) recently beat the Zacks Consensus Estimate and will report again in early August. The stock is a Zacks Rank #1 (Strong Buy) and today it is the Bull of the Day.
The Numbers
FCAU beat the Zacks Consensus Estimate of $0.21 by $0.17 for an 81% positive earnings surprise.
Description
Fiat Chrysler Automobiles (NYSE:FCAU) (FCA) is the Netherlands-based company active in the automobile industry. Its portfolio includes various brands, such as Abarth, Alfa Romeo, Chrysler, Dodge, Fiat, Fiat Professional, Jeep, Lancia, Rama and SRT.
Earnings History
The Zacks Research Service that I lean on heavily to do my research has some data issues with this stock, but there is more than enough to justify it as a Bull of the Day. As I look at the earnings history, I only have data on 3 of the last 6 reports, but 2 of those were beats and one was a meet. The most recent report was a huge beat of the Zacks Consensus Estimate with the company posting EPS of $0.38 compared to the $0.21 estimate for a beat of $0.17 or a nearly 81% positive earnings surprise.
Estimates
The Zacks Consensus Estimate for 2016 started the year at $1.80 and then plunged down to $1.55 in February and kicked lower to $1.52 in March. Prior to the recent beat, analysts became much more positive on the stock and raised numbers of the stock to $1.76 in April and that is where we stand today.
The 2017 number saw some similar moves, bottoming out at $1.92 in February and then crawling higher to $2.09 in March and is now at $2.17.
Estimates for an automobile manufacturer will be a little more volatile than other stocks as they report car sales at the beginning of each month. By the time the earnings report is out the analysts will have a good idea of what the top line is going to look like.
Valuation
FCAU has a forward PE of 4x and that is well below the 9x industry average. The price to book of 0.5x is less than one third of the 1.7x industry average and the price to sales multiple is 0.1x compared to a 0.6x industry average. Clearly the valuation is really low here, and that makes this that much better of an investment for the long term.
Chart
Zacks has developed a chart that helps investors see how earnings estimates have impacted the price of the stock over the last several years. We call this chart the price and consensus chart, and each color coded lines represents analyst estimates over a designated year. As estimates increase, the stock tends to follow. The Zacks Rank is impacted by earnings estimate increases, beats and incorporates the idea of analyst agreement and magnitude. As a Zacks Rank #1 (Strong Buy) we see that estimates are moving higher.
Follow Brian Bolan on twitter at @BBolan1
Brian Bolan is a Stock Strategist for Zacks.com. He is the Editor in charge of the Zacks Stocks Under $10, an investor service , where he recommends the stocks in the portfolio.
Brian also runs the brand new Zacks Game Changers where he looks for stocks that are disrupting their industries and reaping big gains.
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