U.S. Markets closed

Fiat (FCAU) Enters 4-Year Tentative Labor Contract With UAW

Zacks Equity Research

Fiat Chrysler Automobiles N.V. FCAU recently committed to make an investment of $9 billion, by reaching a tentative four-year labor contract with the United Auto Workers (UAW) union. This is likely to boost the $50-billion merger plans of Fiat and PSA, the maker of Peugeot and Citroen, in order to create the world's fourth largest automaker.

Per Bloomberg, Fiat will spend $4.5 billion to boost the output of its Jeep sport utility vehicles and Ram trucks, while the other half of the investment will be spent over the next four years. The company will also generate 7,900 new jobs under this four-year agreement.

Shares of Fiat have rallied 11.8% in the past three months compared with the 9.3% increase recorded by the industry.

However, the agreement is subject to ratification by the UAW members, matching the contract that the UAW concluded with Ford F and General Motors GM. While the Ford-UAW employees secured a $9,000- and $3500-ratification bonus for full-time and temporary workers, respectively, the General Motors-UAW members gained annual lump-sum bonuses or raises and $11,000-ratification bonuses as part of the deal.

Moreover, a federal racketeering lawsuit against Fiat was filed by General Motors recently for bribing UAW union officials. This lawsuit revealed how Fiat has been corrupting the bargaining process for several years in order to gain advantages, causing General Motors significant damages. Nonetheless, Fiat has dismissed the lawsuit as baseless.

Zacks Rank & Stock to Consider

Currently, Fiat carries a Zacks Rank #3 (Hold).

Investors can consider a better-ranked player in the same industry, CarMax KMX, carrying a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CarMax has an estimated earnings growth rate of 10.44% for 2019. The company’s shares have surged 48.1% in a year’s time.

Free: Zacks’ Single Best Stock Set to Double

Today you are invited to download our latest Special Report that reveals 5 stocks with the most potential to gain +100% or more in 2020. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.

This pioneering tech ticker had soared to all-time highs and then subsided to a price that is irresistible. Now a pending acquisition could super-charge the company’s drive past competitors in the development of true Artificial Intelligence. The earlier you get in to this stock, the greater your potential gain.

Download Free Report Now >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
CarMax, Inc. (KMX) : Free Stock Analysis Report
Ford Motor Company (F) : Free Stock Analysis Report
General Motors Company (GM) : Free Stock Analysis Report
Fiat Chrysler Automobiles N.V. (FCAU) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research