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Fiat Chrysler (FCAU) Q4 Earnings: Is a Beat in the Cards?

Zacks Equity Research
Updated

Fiat Chrysler Automobiles N.V. FCAU is set to report fourth-quarter and full-year 2017 results before the opening bell on Jan 25. The company missed estimates once and beat thrice in the trailing four quarters with an average positive earnings surprise of 17.02%.

Fiat Chrysler’s shares have soared 46.2% in the last three months, outperforming the 17.3% growth of the industry it belongs to.

Let’s see how things are shaping up for this announcement.

Fiat Chrysler Automobiles N.V. Price and EPS Surprise

Fiat Chrysler Automobiles N.V. Price and EPS Surprise | Fiat Chrysler Automobiles N.V. Quote

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Why a Likely Positive Surprise?

Our proven model shows that Fiat Chrysler is likely to beat on earnings this quarter. This is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — for increasing the odds of an earnings beat.

Conversely, Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is witnessing negative estimate revisions.

Zacks ESP: Fiat Chrysler has an Earnings ESP of +18.8% as the Most Accurate estimate of 79 cents is pegged above the Zacks Consensus Estimate of 67 cents per share. A positive ESP indicates a likely positive earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Fiat Chrysler carries a Zacks Rank #2 (Buy), which increases the predictive power of ESP.

Factors to Drive Better-than-Expected Results

For the full year, Fiat Chrysler projects revenues in the range of €115-€120 billion ($123.4-$128.8 billion) compared with €111 billion earned in 2016. The company expects adjusted net profit of more than €3 billion ($3.2 billion), up from €2.52 billion recorded in 2016.

In January 2018, the company unpacked its 2019 model year Ram 1500, the flagship edition of its Ram brand. This updated pickup truck is equipped with a bouquet of technological features and is expected to find space in showrooms by the year-end. Such newly-introduced vehicles will expand the company’s product line and enable Fiat Chrysler to fortify its footprint among customers.

Also, the company will be investing around $1 billion in developing its future plant at Warren, MI, located near Detroit. Expected to be actively operating by 2020, the facility will help the company manufacture Ram heavy-duty pickup trucks in the United States, constituting a major portion of its pickup truck market.

Other Stocks to Consider

Here are a few other stocks worth considering from the auto industry with the right combination of elements to surpass estimates this time around:

Allison Transmission Holding, Inc. ALSN has an Earnings ESP of +10.40% and a Zacks Rank of 2. The company will report fourth-quarter 2017 financial results on Feb 5. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Genuine Parts Company GPC has an Earnings ESP of +4.83% and carries a Zacks Rank of 3. The company’s fourth-quarter 2017 financial results are expected to be released on Feb 20.

Visteon Corporation VC has an Earnings ESP of +3.81% and is a Zacks #3 Ranked player. The company’s fourth-quarter 2017 financial results are expected to be announced on Feb 22.

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Fiat Chrysler Automobiles N.V. (FCAU) : Free Stock Analysis Report
 
Visteon Corporation (VC) : Free Stock Analysis Report
 
Allison Transmission Holdings, Inc. (ALSN) : Free Stock Analysis Report
 
Genuine Parts Company (GPC) : Free Stock Analysis Report
 
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Zacks Investment Research