Fiat SpA (BIT:F) (BIT:FP) appears to be one of the most undervalued auto manufacturers within Europe right now. However, I hesitate to recommend a stock that has 91% of the brokers covering it recommending the company as either a Sell or Hold and the consensus price target is below the current price. That said, the company trades at some compelling valuation metrics that make it look highly appealing.

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For a start Fiat SpA (BIT:F) (BIT:FP)’s revenue growth during 2012 exceeded the average of its main peers by a staggering 511% and the company’s EBIT margin was 20bps higher than the industry average Moreover, Fiat’s return-on-invested-capital and return-on-equity also stood above that of its peer group. ROIC for 2012 was 6.2%, 150bps above the average of its major peers and ROE came in at 10.7%, compared to the average of 8.5%.

So, in comparison to peers such as, Ford Motor Company (NYSE:F), Volkswagen AG (ETR:VOW) (FRA:VOW), Toyota Motor Corporation (NYSE:TM) (TYO:7203) and Peugeot SA (EPA:UG), Fiat would appear to be the fastest growing and more efficient company.

And it doesn’t stop there. Fiat SpA (BIT:F) (BIT:FP) currently trades at a price-to-book value of 0.5, although this does not make it the cheapest of the European car manufactures, (that crown belongs to Peugeot, which trades at a price-to-book ratio of 0.4).

Elsewhere, the value continues to show through. On both an EV/Revenue and EV/EBIT basis, Fiat trades at a 75% and 74% discount to that of its sector peers respectively.

So why is Fiat offering such a discount to its peers? Well, for a start the company is not about to become insolvent, net debt stands at 11.5% of assets and has fallen nearly 50% over the past five years. Current assets cover current liabilities 1.2 times and cash has been growing steadily at a compounded-annual-growth-rate of 41% for the last five years. Furthermore, Fiat is not overly exposed to Europe, 54% of the company’s 2012 revenue came from Latin America with the rest spread around the world. That said, 9% of revenue came from Italy.

Fiat’s tax bill is expected to nearly triple this year

Having said all of that, one thing that is expected to hit Fiat SpA (BIT:F) (BIT:FP) hard this year is tax. Fiat’s tax bill is expected to nearly triple this year, cutting the company’s net profit margin to 0.4%, down from the 1.7% reported last year. Unfortunately, this is not a one-off and Fiat’s future earnings are expected to be strangled by a higher corporate tax rate.

Still, despite the higher tax bill, it would appear as if Fiat’s low valuation in relation to its peers is not totally justifiable. In particular, even though earnings have been slashed, the company is still expected to grow strongly and analysts have pencilled in revenue growth of 17% for the next three years.

Actually, even after the deduction of tax, this revenue growth is going to translate onto the bottom line. Net profit is expected to grow 92% during 2013-2014 and then 56% during 2014-2015 – bear in mind that due to the tax situation, net profit is expected to collapse 75% this year.

Fiat would appear to be one of the most undervalued

So all in all, Fiat SpA (BIT:F) (BIT:FP) would appear to be one of the most undervalued, efficient and productive auto manufactures within the Eurozone, all that is holding the company back is a rising tax bill but otherwise, the company is a very good looking investment.