Why Investors Approved of Fiat Chrysler’s 1Q17 Earnings



Fiat Chrysler’s 1Q17 earnings

Italian-American auto giant-Fiat Chrysler Automobiles (FCAU) released its 1Q17 earnings report on April 26, 2017. The company reported solid adjusted EPS (earnings per share) of 0.43 euros, or $0.47, ~26% higher than its EPS in the corresponding quarter of the previous year.

Its EPS were also higher than analysts’ estimate of 0.42 euros, or $0.45. Before we look at Fiat Chrysler’s 1Q17 earnings’ key highlights, let’s take a quick look at how investors reacted on the day of its earnings release.

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FCAU’s stock zoomed up

On the day of its 1Q17 earnings release, FCAU’s stock rallied to close at $11.65, a rise of ~10.5% in the session.

Despite a fall in the company’s 1Q16 NAFTA (North American Free Trade Agreement) sales, its higher sales in Europe, Latin America, and the Asia-Pacific region kept the optimism alive. Fiat Chrysler’s margins also improved in the first quarter. With these factors, the company also came closer to its 2018 targets.

Interestingly, this was the third consecutive quarter during which FCAU stock rose on the day of its quarterly earnings release.

As of April 27, Fiat Chrysler stock had inched up 23.6% in 2017 so far. This performance is far better than those of its direct peers, including General Motors (GM) and Ford Motor Company (F). Currently, GM and Ford, the two largest US automakers (XLY), are trading in negative territory, with ~0.9% and 5.4% year-to-date losses, respectively.

In contrast, the US electric carmaker Tesla (TSLA) has risen over 44% in 2017 so far. Tesla will release its 1Q17 earnings on May 3, 2017. Read Will Tesla’s 1Q17 Earnings Justify Stellar Year-to-Date Gains? to learn about analysts’ estimates for its upcoming earnings.

Series overview

In this series, we’ll explore Fiat Chrysler Automobiles’ 1Q17 revenues and profitability. We’ll find out what key factors drove FCAU’s first-quarter earnings. We’ll take a closer look at the company’s progress toward its 2017 guidance and whether it can drive its stock higher going forward in 2017.

Toward the end of the series, we’ll also explore some important factors that may affect Fiat Chrysler’s valuation multiples in the coming quarters.


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