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Fiat Chrysler Offers Investors A Forward P/E Ratio Below 5

Aug. 02, 2018 11:57 AM ETStellantis N.V. (STLA)F, GM, HYMLF, RACE, TSLA56 Comments
Josh Ortner profile picture
Josh Ortner


  • P/E ratios of four to five times forward earnings next year.
  • Analyst median price targets of roughly $24.00/share.
  • Magneti Marelli spin off to happen late 2018 to early 2019.

Once upon a time, there was an automaker barely surviving during the great financial crisis. Plagued with high debt to equity levels and low sales during the Great Recession, it was hard to imagine that this automaker would be on the road to financial independence when Fiat acquired them in 2014. Financial ratios such as a trailing price to earnings didn't matter when a company was in serious doubts of staying solvent.

With the leadership of Sergio Marchionne, Chrysler's darkest days would be turned into some of its best days. There is no doubt that Sergio's vision of a debt-free FCAU (FCAU) and a core competence focused Jeep and Ram maker will be missed. I could write a whole article on just Sergio Marchionne and his financial acumen; however, this is Seeking Alpha, and we want to drive home the point of why FCAU is an interesting investment right now. Below, I want to detail key introductory financial ratios that give individual investors a great insight into how the company is doing.

Valuation Metrics For FCAU

Price to Earnings

The P/E ratio is everyone's quick gauge of what a company's trailing twelve months earnings is, and usually a culprit used by financial media to give us some type of an idea of what the stock is worth. The current P/E ratio of FCAU stands at 5.95.

ChartFCAU data by YCharts

Forward Price to Earnings

This ratio is a little more useful to me, as it accounts for future earnings for a company and compares its earnings to the value of the business. It currently is standing at 4.05. Yes, you're reading that right. Compare this ratio to that of Tesla (TSLA), and it's hard to figure out why anyone wouldn't purchase shares in FCAU.

ChartFCAU data by YCharts

Price to

ChartFCAU data by YCharts

ChartFCAU data by YCharts

This article was written by

Josh Ortner profile picture
Mr. Ortner is a published author in areas focusing on anti-money laundering and risk management. He focuses his writing on the importance in reviewing the fine prints of complex financial products and offerings. Mr. Ortner is currently a Certified Anti-Money Laundering Specialist. All articles are opinions of Mr. Ortner and should never be construed as personal financial advice.

Analyst’s Disclosure: I am/we are long FCAU. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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