“Ferrari (NYSE:RACE) which saw its share price drive over 300% higher during the past 5 yrs since its IPO” — Paul Ebeling
During 5 yrs of share price growth, Ferrari achieved compound EPS growth of 22% per year. This EPS is slower than the share price growth of 32% per year, over the same frame. This suggests that market participants hold the company in very high regard, not shocking given the track record of growth and it position on Top of the automotive sector, RACE is an Aristocrat.
You can see how EPS has changed over time in the image below
We know that Ferrari has improved its bottom line, and believe it will continue to do so.
It is important to consider the TSR (total shareholder return), as well as the SPR (share price return) for any given stock.
Whereas the SPR only reflects the change in the share price, the TSR includes the value of invested dividends. Ferrari’s TSR for the last 5 yrs was 310%, which exceeds the SPR. This is largely a result of its dividend payments. Ferrari a an Aristocrat, and the firm provided a TSR of 20% over the last 12 months
Ferrari is The Aristocrat of the automotive sector.
Our overall technical outlook is still Bullish, a Key indicators are Bullish long-term. Ferrari reported strong earnings for Q-3 on 3 November and did the same for Q-4 and F-Y 2020 as reported on 2 February.
Ferrari finished Monday at 217.13 within its 52 wk range of 127.73 – 233.66 in NY. It’s all time high in NY was marked at 233.66 intraday on 29 December.
Key technical indicators have turned Bullish mid-to long term. The candlestick pattern indicates the confirmation of the break out at 196.01 on 3 November and confirmed.
The Key support is at 216.43 and the Key resistance is at 223.51. The 5 October Bullish Engulfing candle augurs the Bullish trend will continue. The stock is still very oversold in here.
Friday, Morgan Stanley called out $RACE a “sleeper” EV play as the firm can justify more than 100% of the company’s value with its ICE business.
Note: At the beginning of Y 2020 I called RACE at 230 by year’s end, the stock was trading at 165.22 on 1 January 2020, on 29 December 2020 it marked 233.66 intraday, its all time high
The Maranello Outfit’s shares were raised to Buy from Hold at HSBC, and Buys at Morgan Stanley and Bank of America.
UBS is now calling the stock at 365. I have not seen any other Street downgrades.
Ferrari will continue to create value in the long term as it becomes the world’s 1st Super Luxury brand.
Ferrari is a quality 1st long term luxury products investment, BAML raised its call to 270 long term.
I have raised my long term target to 375, a Strong Bull call, the strongest on the Street and am holding the mark during this recent profit taking, and seeing RACE as a buying opportunity.
Ferrari has an average rating of Buy and a consensus target price at 231.99.
The Maranello Outfit’s shares were raised downgraded from Buy to Hold at HSBC.
Ferrari will continue to create value in the long term. Ferrari is a quality 1st long term luxury products investment, and I am calling it 375 long term, the Top on the Street, and adjusting it to 250/share short term.
A number of large investors have recently bought shares of RACE, and there have been very few instances of insider selling over the past yr that we have seen. And Ferrari continues to buy back its stock in here.
The stock is considered defensive in the sector.
Have a prosperous week, Keep the Faith!