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Bear of the Day: Fiat Chrysler (FCAU)

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You may have been hearing something about peak auto over the last several months. That refers to new auto sales here in the US. It seems that there has been so much new car buying, record levels of new cars being purchased, and that may be slowing. While zero percent financing deals certainly provide incentive for customers to keep on upgrading, many fear that the top is in.

The foreign automaker business is in the Bottom 7% of our Zacks Industry Rank. Among the bottom of the ranks right now is today’s Bear of the Day Fiat Chrysler (FCAU - Free Report) . If any of you have read me before, you may know that I’m a car guy through and through. I could name off 20 cars I’d love to own or drive right now and very few of them would be made by this company. Sure a Hellcat Charger or Challenger from Dodge would be great to enjoy for a weekend, but I’m not exactly going out of my way to check out a Pacifica. And while Fiat does have some quirky smaller cars that seem neat to putt around in, this isn’t exactly the company that makes the most sought after automobiles.

I’ll throw my personal bias aside here and look strictly at the numbers. There’s a reason why this stock is currently a Zacks Rank #5 (Strong Sell). Two analysts have dropped their estimates for the current quarter, the current year and next year. The bearish attitude on the street has dropped our Zacks Consensus Estimate from 50 cents to 41 cents for the current quarter. Next year’s number has dived from $2.12 to $1.78.

In the company’s defense, perhaps those numbers don’t warrant the type of response we’ve seen in the stock price. Shares have gone from over $11 in October 2015 to 52-week lows at $5.45 earlier this month. A small countertrend rally from late January through March of this year wasn’t enough to get shares to $9. Since then it looks like another downward channel is being carved out. The stock seems to be failing at the top end of this channel yet again.

Currently there is not a single stock in the foreign or domestic automakers industries that is better than a Zacks Rank #3 (Hold). But if you’re looking for a stock that may turnaround soon, both Tata Motors (TTM - Free Report) and Toyota Motors (TM - Free Report) have VGM Composite Scores of A.

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