Pivotal Q2 Profits Show Stellantis Ready to Drive Turnaround. Time to Buy the Stock?

Stellantis (NYSE: STLA) has had a bumpy few years that saw the company lose market share in key regions, take massive one-time charges for its pullback on electric vehicles (EVs), and lack a true overall identity with its list of overlapping brands. However, Stellantis has a global turnaround plan that includes investing heavily in key brands such as Jeep and Ram.

Stellantis stock has shed 70% of its value over the past three years. It trades with a market capitalization about one-third that of rival General Motors and less than half that of Ford Motor Company. The good news for investors is that the second quarter suggests Stellantis' turnaround is already gaining traction.

STLA gains momentum

Stellantis gave investors a tiny glimpse of what CEO Antonio Filosa's $70 billion turnaround plan could bring to financial results. Last week, the company turned in a Q2 profit driven by rising demand for its vehicles in North America, arguably the most important region for the automaker globally. Still, Wall Street doesn't seem impressed. The stock sold off almost 10% after announcing Q2 results, before recovering some of those losses.

Stellantis posted Q2 net profit of 293 million euros, or about $335.3 million, compared to a prior-year loss of 1.87 billion euros. Adjusted operating income more than tripled during Q2 to 773 million euros, but still checked in below Wall Street estimates calling for 914 million euros.

Despite Wall Street remaining unimpressed, and investors hesitant to jump on board the early turnaround story, there were a number of positives in Stellantis' Q2. North America, which will be key to Stellantis' rebound, was a bright spot with market share rising to 7.4%, up from a flat 7% a year ago. Adjusted operating margins for the company were positive at a modest 1.8%. Over the next five years, driven by the launch of many new vehicles, Stellantis aims to drive North American margins to between 8% and 10%.

"The Ram 1500 was a key driver of both volume growth and profitability in the quarter, with strong demand for the reintroduction of the legendary Hemi V-8 engine," Filosa said in a press release. "Building on that momentum, we are now shipping the highly profitable Ram 1500 TRX SRT to customers, just six months after its unveiling. This is the first off-road product from our SRT performance division, which we relaunched only one year ago."

What it all means

As mentioned, Ram was a key driver of Stellantis' surge in North America. The company achieved its fourth consecutive quarter of year-over-year growth with sales increasing 6%, after seven calendar years of annual declines. Stellantis remains on track after having launched two all-new and three refreshed vehicles during Q2, and has nine additional new and refreshed vehicles coming soon.

Image source: Stellantis Q2 slide deck.

Stellantis expects to drive higher profitability during the second half of 2026. This is thanks to more Ram 1500 SRT TRXs, priced at a staggering $102,590 with shipping, heading to dealerships now, later to be followed by a Ram 1500 Rumble Bee starting in the lower $60,000s. What investors might have forgotten is that performance-driven SRT trims bring margins that are two to three times higher than comparable non-SRT variants, and the automaker plans to offer 11 SRT models across Ram, Jeep, and Dodge brands over the next five years.

For investors willing to take on some risk, Stellantis might have the most upside over the next five years, if only because it's been so heavily sold off after a rough few years. Q2 showed solid improvement in many key metrics, including profitability, market share, and number of vehicle launches. It also showed that Stellantis remains on pace to drive financial improvements, not only through its fresher vehicle lineup, but through improved plant production efficiency and growing scale.

If this is truly the beginning of Stellantis' massive turnaround plan gaining traction in a key market, it comes at a time when Wall Street is still asking to see more. That gives investors an opportunity to get in early on a turnaround that could send its stock much higher than broader markets over the next three to five years.

Daniel Miller has positions in Ford Motor Company and General Motors. The Motley Fool recommends General Motors and Stellantis. The Motley Fool has a disclosure policy.