Why Federal-Mogul Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Federal-Mogul (NASDAQ: FDML  ) were revving up today, gaining as much as 21% after a strong third-quarter-earnings report.

So what: The auto-parts supplier topped expectations on both top and bottom lines, posting a per-share profit of $0.26 against expectations of just $0.12, while revenue increased 9.4%, to $1.69 billion, ahead of the consensus at $1.67 billion. Co-CEO Rainer Jueckstock noted that results were "driven by much stronger demand for products in European light-vehicle production," as Europe has moved out of recession. Management also noted improved aftermarket demand in North America, and China was an especially strong area for the Powertrain maker as sales moved up 37%.

Now what: The year 2013 has been an excellent one, not just for Federal-Mogul, but for auto stocks across the board. Federal-Mogul, which also makes vehicle components for aftermarket use, has now seen its shares nearly quadruple since a bottom under $5 in April after three significant earnings beats. With the situation in Europe continuing to improve, and auto demand still backed up in the U.S., I'd expect a few more solid earnings reports out of Federal-Mogul.

For the auto industry, China's where it's at
U.S. automakers boomed after WWII, but the coming boom in the Chinese auto market will put that surge to shame! As Chinese consumers grow richer, savvy investors can take advantage of this once-in-a-lifetime opportunity with the help from this brand-new Motley Fool report that identifies two automakers to buy for a surging Chinese market. It's completely free -- just click here to gain access.



Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2695664, ~/Articles/ArticleHandler.aspx, 10/31/2014 1:59:37 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement