Ferrari (NYSE:RACE) share price. It’s 418% higher than it was 5 yrs ago. This demonstrates the value creation that some businesses can achieve. It is also good to see the share price up 23% in the last Quarter.
Share prices reflects investor sentiment, not just underlying business performance.
Our way to examine how market sentiment has changed over time is to look at the interaction between a company’s share price and its EPS.
During 5 yrs of share price growth, Ferrari achieved compound EPS growth of 11% per yr. This EPS growth is lower than the 39% average annual increase in the share price. So, it is fair to assume the market has a higher opinion of RACE now than it did 5 yrs ago. Not shocking, given the track record of growth.
This good sentiment is reflected in its luxury goods P/E ratio of 66.35.
The Big Q is: Will the Maranello Outfit grow earnings going forward.
Note: The TSR (total shareholder return) incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So, for companies that pay a generous dividend, the TSR is often a higher than the share price return. In the case of Ferrari, it has a TSR of 440% for the last 5 yrs. That exceeds its share price return mentioned above and below. This is largely a result of its dividend payments.
We follow Ferrari closely and report regularly, so stay tuned.
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.
Ferrari finished trading Thursday at 229.52, -0.17 against it 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.
All technical indicators are Bullish the Key support is at 214.84, the Key resistance is 233.59. Ferrari’s stock is extremely oversold in here, and the pattern indicates that all of the year end profit taking is over.
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, it all time high
The Maranello Outfit’s shares were raised to Buy from Hold at HSBC, Morgan Stanley and Bank of America. UBS is now calling the stock at 365. Citi downgraded the stock from Buy to Neutral Thursday. 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 the profit taking this week. Seeing RACE as a buying opportunity.
Ferrari has an average rating of Buy and a consensus target price at 219.80.
The Maranello Outfit’s shares were raised to Buy from 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 230/share short term.
A number of large investors have recently bought shares of RACE, and there is no insider selling.
The stock is considered defensive in the sector.
Have a healthy weekend, Keep the Faith!
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