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Why Fiat Chrysler Outperformed Its Peers in 4Q16

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Fiat Chrysler outperformed

So far in this series, we reviewed US automakers’ recent price movements (XLY) including General Motors (GM), Ford (F), and Tesla (TSLA). Last week, mainstream auto companies remained positive. As of November 25, 2016, Fiat Chrysler (FCAU) gained the most among its peers. So far, it gained over 20% in 4Q16. Now, let’s find out what might be keeping Fiat Chrysler’s stock positive and what to expect in the week ahead.

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Possible reasons

In 3Q16, Fiat Chrysler reported strong adjusted EPS (earnings per share) of 0.47 euros or $0.53—more than double its EPS in 3Q15. The EPS was also much higher than analysts’ estimate of 0.36 euros or $0.40.

On Wall Street, investors reacted positively to the company’s 3Q16 earnings. Strong profitability from Fiat Chrysler’s Jeep brand and improving performance in Europe and Asia-Pacific were the key positive highlights of its earnings.

Note that any gains in an automaker’s medium or heavyweight vehicle sales usually expand its margins. Therefore, expectations of higher profitability driven by strong Jeep retail sales in 4Q16 could be the primary reason behind Fiat Chrysler’s Wall Street gains.

Key technical levels

On Friday, Fiat Chrysler settled at $7.70 with 3.6% gains for the week.

After approaching an important support level near $6.05 in mid-October, the price bounced back by the end of the month. On the downside, the $6.95 level should act as an immediate support level. No major horizontal resistance area is seen below $8.10. Therefore, a possibility of price testing the resistance in the coming weeks remains open.

To learn what recent economic data suggest for the auto industry, read Auto Industry: Decoding Economic Indicators after 3Q16 Earnings.

Read Did the SolarCity Acquisition Impact Tesla’s Energy Business? to learn how Tesla’s energy product lineup looks after the SolarCity acquisition.

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