Why Federal-Mogul Shares Plunged


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 stalling out today, falling as much as 14% after reporting a weak quarterly earnings report.

So what: The maker of powertrains and other auto components suffered a similar fate as other industry peers as weakness in Europe drove the company to a loss once again. The auto-parts maker said it plans to restructure through 2015, and will shift capacity from Western Europe to cheaper locales like Asia, Mexico, and Eastern Europe. For the quarter, Federal-Mogul posted an adjusted loss of $0.41 a share against expectations of a $0.15 per-share profit. Revenue, meanwhile, fell 3% to $1.6 billion on a 13% decline in industrial engine production and a 14% drop in European light vehicle production.

Now what: Today's drop is only the latest folly for Federal-Mogul, which has lost more than half its value in the past year. Including all charges, the company lost $1.18 per share for 2012, and with restructuring likely to continue hampering the bottom line until 2015, consistent profitability may be at least a few quarters away. The major carmakers have signaled that European conditions should improve by the second half of the year. I might check back on Federal-Mogul then. You can do the same by adding the stock to your Watchlist here .

The article Why Federal-Mogul Shares Plunged 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.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.