FLASH: Ferrari stock is a Bull run since July 2016, and the expected growth could help drive the stock due North,as the company has great revenue, great profits and pays dividends to boot.
I have been interested in and driving Ferrari’s for over 50 years, and for most of them the iconic Italian supercar maker struggled, but now it is ‘singing’
Capitalism requires profit, Ferrari (NYSE:RACE) not only has the widest margins in the industry, it has demand that it carefully manages and a F1 racing team that is in the news daily.
In comparison, loss making companies like Tesla act like a sponge for capital, but unlike such a sponge they do not always produce something when squeezed as 1 analysts put it.
In the stock market share price follows EPS sooner or later. So, it is no surprise that savvy investors (not speculators) invest in companies with EPS growth.
And if you have been following this column since Ferrari’s IPO you have blown away by the fact that Ferrari has grown EPS by 40% per year, over the last 3 years. It will not always be like that but I do expect it to continue and drive the shares to 200+ in the long term. Ferrari is a core position.
Top-line growth is an indication that growth is sustainable, and look to a high earnings before EBIT margin to point to protection. Ferrari has maintained stable EBIT margins over the last year, all while growing revenue 3.0% to about $4-B, and that is very positive.
The chart below shows how the company’s Bottom and Top lines have progressed over time.
Since Ferrari has a market capitalization of about $40-B, we might not expect insiders to hold a large percentage of shares. But they have and do have lots and lots of their wealth invested in it, currently valued at about $3.5-B, that is very encouraging, as it ensures investors that the leaders of the company experience success, or failure, with the stock too.
Important: The CEO of Ferrari only received $350-K in total compensation for the year ending December 2018. That is well below average for a company the size and the arrangement generous to shareholders, and points to a modest remuneration culture, and it shows that the leadership are looking out for shareholder interests, it is a sign of the integrity of Ferrari’s culture as designed by its founder, Enzo Ferrari over 70 yrs ago.
The strong EPS tells us the businesses is running on all 12 cylinders. Ferrari is well worth new investor consideration.
Ferrari is the Aristocrat of the automotive sector.
The iconic Italian Supercar manufacturer claimed the title according to the latest Brand Finance Global 500 2019 report launched at the World Economic Forum in Davos.
HeffX-LTN overall technical outlook for RACE is Very Bullish, overhead resistance now stands at 167.92, and strong support at 160.45, all Key indicators are Very Bullish in here. Ferrari finished at 165.12, +1.93 Tuesday in NY.
Have a terrific Holiday week.
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