FCAU: Bullish Analysts, Revenues in Focus before 1Q17 Earnings

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Part 5
FCAU: Bullish Analysts, Revenues in Focus before 1Q17 Earnings PART 5 OF 8

Analysts Expect Fiat Chrysler’s 1Q17 Margins to Expand

FCAU’s 1Q17 earnings

Previously in this series, we noted that analysts are estimating Fiat Chrysler Automobiles’s (FCAU) 1Q17 revenues to be higher on a year-over-year basis. Despite poor 1Q17 sales performance in the US market, the company is expected to benefit from higher sales figures in the European market. 

Now, let’s take a look at some key factors that could expand Fiat Chrysler’s 1Q17 margins.

Analysts Expect Fiat Chrysler&#8217;s 1Q17 Margins to Expand

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1Q17 margin estimates

According to Wall Street analysts’ estimates, FCAU is likely to report an EBITDA1 margin of ~11.3% in 1Q17. This shows an expansion over its 1Q16 EBITDA margin of 10.5%.

Similarly, analysts estimate that Fiat Chrysler’s net profit margins could expand to 2.4% in 1Q17. The company reported net profit margins of 1.8% in 1Q16. FCAU’s US truck segment sales rose 5% YoY in 1Q17, which could help its margins expand. Heavyweight vehicles, including trucks, tend to have higher margins for automakers (XLY) compared to small cars.

Peer comparison

Currently, Fiat Chrysler has the lowest net profit margins among its direct peers (XLY). The company’s net profit margins in North America are much lower than those of other major players, including Ford Motor Company (F), General Motors (GM), and Toyota (TM).

In 4Q16, Fiat Chrysler’s net profit came in at 409.0 million euros, or $437.0 million. FCAU’s net profit margin of 1.4% was much better than its net profit margin of 0.70% in 4Q15.

Continue to the next part to learn how Fiat Chrysler’s current leverage position looks before its 1Q17 earnings results.

  1. earnings before interest, tax, depreciation, and amortization

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