A Risky, but Misunderstood Automaker
Management credibility and debt issues have been clouds over Fiat Chrysler's stock, but the deep discount to our fair value estimate could make it an interesting if volatile pick.
Richard Hilgert: Morningstar best-idea stock, Fiat Chrysler (FIATY), 5-star rated. Wall Street really misunderstands this stock, and the reason why they misunderstand it is partially because of management credibility and previous five-year plans that the company has put out. Those five-year plans had things like unit volume in Europe really messing up the plans, along with the fact that Chrysler became available in April of 2009. That has really changed this company structurally.
Operationally, we look for additional integration and cost savings to come from future five-year plans that are currently in place. Those plans we've substantially discounted in our model, and we still come up with a fair value estimate of €14, which shows you the credibility issue with the stock currently trading at €7.
Richard Hilgert does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.