Why Federal-Mogul Shares Jumped

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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 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.

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The article Why Federal-Mogul Shares Jumped originally appeared on Fool.com.

Fool contributor Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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