Al Root

Stellantis stock fell after the auto maker announced weaker-than-expected fourth-quarter results. Things are getting better, but the turnaround isn't complete for the parent of Dodge and Jeep.

Tuesday, Stellantis reported a second-half 2024 operating loss of about $3.1 billion. Wall Street was looking for a profit of about $1 billion, according to FactSet.

Falling sales were partly responsible for the weaker-than-expected results. The auto maker sold about 2.6 million vehicles in the second half of 2024, down from 2.9 million in the first half and down from 3.1 million in the second half of 2023.

North American sales dropped to about 600,000 vehicles in the second half of 2024, down from almost 900,000 in the second half of 2023.

Too-high dealer inventories have plagued the North American business. Traditional auto makers sell to dealers, and dealers sell to consumers. When inventories are high, dealers don't order cars.

U.S. "dealer stock" dropped to 304,000 units, surpassing the company's target of 330,000 units. Based on 2024 selling rates, that is still a little more than two months' worth of stock, which is a little high but much better than recent levels.

Looking ahead, Stellantis expects positive revenue growth, "mid-single digits" operating profit margins, and positive free cash flow. This forecast is relatively vague but broadly aligns with Wall Street estimates.

The guidance accounts for "elevated industry uncertainties" but doesn't mention President Donald Trump's threatened 25% tariffs on Canada and Mexico, specifically.

Stellantis imports roughly 45% of the cars it sells in the U.S., according to Bloomberg. Canadian and Mexican production are the reasons those numbers look high. Many car companies have spent the past 30 years-plus treating North America as one free-trade zone.

Despite the solid outlook, earnings appear to be weighing on shares. Stellantis stock was down 5% in overseas trading. U.S.-listed American depositary receipts were down 3.6% at $13.52 apiece, while S&P 500 and Dow Jones Industrial Average futures were up about 0.5% and 0.3%, respectively.

Coming into Wednesday trading, Stellantis ADRs were down about 46% over the past 12 months. High inventories led to a collapse in shipments and profits and led to the departure of CEO Carlos Tavares.

Stellantis is still digging itself out of the current conundrum.

At current levels, shares trade for about 5 times estimates 2025 earnings. Stellantis stock traded for closer to 3 times earning since the pandemic. Trading for a lower multiple of higher earnings is a sign that investors didn't expect the good times to continue.

They didn't. Stellantis is expected to earn about $2.80 a share in 2025, down from a record of almost $7 in 2023.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

February 26, 2025 09:35 ET (14:35 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.