But which ones should you consider? F, SMP, This updated version adds the closing share price of Fiat. Penney jumps as new CEO is named You should begin year-end retirement planning now. Philip van Doorn. Why the new tax law caused a 'perfect storm' for Roth IRA conversions. I rebuilt my life after hitting rock bottom at My estranged daughter says she only wants my money and jewelry. On Nov. Though Ford might reward investors this year, investors with longer-term horizons should consider better bets.
That lowers return on invested capital ROIC and makes them prone to bankruptcies — two terrible qualities for long-term investment. But with the coronavirus pandemic, even growth investors like myself have started looking at cheap carmakers. In September, Robinhood , a popular trading app, showed Ford stock as the No.
Never mind that the automaker had averaged just 3. And that was in before the coronavirus pandemic sent profits even further down the drain. Today, Ford trades at just 9x forward earnings. That means even a minor re-rating to 12x would mathematically speaking push the stock up by a third. And with analysts like Rosner calling for positive earnings surprises, Ford stock could rise in the short term.
Since its merger in , Fiat Chrysler has proven itself adept at self-help. The company is also relatively cheap, thanks to its higher margins. Whereas Ford trades at 9x times forward earnings, FCAU trades at just 7x times, one of the lowest in the automobile industry. How has FCAU managed such profits? Not unlike the U. The headwind is prompting several European automobile companies to consider alternative arrangements that will bolster bottom lines, even if top-lines are set to stagnate.
Fiat Chrysler is no exception to this possibility. However, Fiat Chrysler has also found itself in the middle of something of a soap opera as it and its competitors work to determine what its optimal arrangements might be.
As it stands right now, there are four reasonably plausible outcomes that run across the entire spectrum of possibilities. Such a deal would have to clear several hurdles though, chief among them being the fact that Renault and Nissan remain two distinct entities themselves and may well remain that way.
Further straining the relationship is the fact that Carlos Ghosn, former chairman of Renault and Nissan, was arrested in Tokyo late last year on charges of financial misconduct. Such a pairing has the support of at least some analysts. Hyundai, meanwhile, was reportedly interested in Fiat in the middle of last year a rumor Hyundai denied but a possibility that makes some sense all the same.
The buzz was that Hyundai was simply waiting for the price of Fiat Chrysler stock to sink. Bernstein analyst Max Warburton is a doubter. But, Warburton made a valid point about the sheer difficulty of any international dealmaking.
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