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Fiat Chrysler (FCAU) Obtains Approval for New Hub in Michigan

Zacks Equity Research

Per AP, Fiat Chrysler N.V.’s FCAU plan to set up an assembly hub in Detroit, MI, has been approved by the Detroit City Council. The company will invest $1.6 billion to construct the plant that is likely to start rolling out vehicles by the end of 2020. Apart from the new factory, the automaker will invest $900 million to upgrade and modernize the Jefferson North Assembly Plant, which will be used to manufacture Dodge Durango and next-generation Jeep Grand Cherokee. The to-be-build plant and the existing Jefferson plants will be adjacent.

The recent investment approval is part of Fiat Chrysler’s plan to invest $4.5 billion at five existing Michigan plants. In February 2019, the company announced the investment that will help it meet the growing demand for vehicles under the Jeep and Ram brands.

Apart from the go-ahead signal, the automaker has been approved a $223-million incentive package from Michigan's economic development board. The incentive is in exchange for the 6,400 jobs that will be created once the hubs start working. Out of the total incentive, $55 million is for site preparation and $168 million is in forms of tax breaks, exemptions and cash.

Fiat Chrysler Automobiles N.V. Price and Consensus

Fiat Chrysler Automobiles N.V. Price and Consensus

Fiat Chrysler Automobiles N.V. price-consensus-chart | Fiat Chrysler Automobiles N.V. Quote

At the beginning of May, the European automaker announced first-quarter 2019 results. During the period, its net revenues and earnings per share witnessed year-over-year rise of 5% and 42%, respectively. Its financial growth was driven by product launches, and drop in launch and logistics costs.

Price Performance

Over the past six months, shares of Fiat Chrysler have lost 17% compared with the industry’s decline of 5.5%.

 

 

Zacks Rank & Stocks to Consider

Fiat Chrysler currently carries a Zacks Rank #4 (Sell). A few better-ranked stocks in the broader auto sector are LCI Industries LCII, Meritor, Inc. MTOR and AB Volvo VLVLY. LCI currently carries a Zacks Rank #2 (Buy) while Meritor and Volvo sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

LCI Industries has an expected long-term growth rate of 16%. The stock has gained 24.7% in the past six months.

Meritor has an expected current-year growth rate of 16.8%. The stock has gained 29.45% in the past six months.

Volvo has an expected long-term growth rate of 5%. Over the past six months, shares of the company have gained 8%.

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Fiat Chrysler Automobiles N.V. (FCAU) : Free Stock Analysis Report
 
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