By Rob Otman
Fiat Chrysler (NYSE: FCAU) is an $18 billion company today. Investors that bought shares one year ago are sitting on a 43.57% total return. That’s above the S&P 500’s return of 16.98%.
Fiat Chrysler stock is beating the market, but does that make it a good buy today? To answer this question we’ve turned to the Investment U Stock Grader. Our research team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
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Earnings-per-Share (EPS) Growth: Fiat Chrysler reported a recent EPS growth rate of 117.08%. That’s above the automobile industry average of 2.51%. That’s a great sign. Fiat Chrysler’s earnings growth is outpacing competitors.
Price-to-Earnings (P/E): The average price-to-earnings ratio of the automobile industry is 34.64. And Fiat Chrysler’s ratio comes in at 6.05. It’s trading at a better value than many of its competitors.
Debt-to-Equity: The debt-to-equity ratio for Fiat Chrysler stock is 124.26. That’s above the automobile industry average of 100.08. That’s not a good sign. Fiat Chrysler’s debt levels should be lower.
Free Cash Flow per Share Growth: Fiat Chrysler’s FCF has been lower than its competitors over the last year. That’s not good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.
Profit Margins: The profit margin of Fiat Chrysler comes in at 1.39% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Fiat Chrysler’s profit margin is below the automobile average of 4.51%. So that’s a negative indicator for investors.
Return on Equity: Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for Fiat Chrysler is 10.02%, and that’s below its industry average ROE of 11.08%.
Fiat Chrysler stock passes two of our six key metrics today. That’s why our Investment U Stock Grader rates it as a hold with caution.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth. For more details, click here.
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Source:: Investment You
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