Ferrari (NYSE:RACE) is a High Performance ‘Machine’

Ferrari (NYSE:RACE) is a High Performance ‘Machine’

Ferrari (NYSE:RACE) is a High Performance ‘Machine’


Ferrari, the world’s Top automotive brand, is an iconic performance machine, and not just its Supercars.

A look the financial performance shows exceptional performance, too.

No car maker in the sluggish, low valation sector has data that apply to Ferrari.

The Q-1 data showed strong earnings of 0.96/share beat estimates by 0.12/share, while revenue grew 1.2% to $991.3-B just shy of $1-B.

Those earnings are up 20% Y-Y from Q-1 Y 2017. On the revenue front, sales actually grew 6.3% adjusted for currency fluctuations.

And, look at just how much the bottom line expanded Vs the top line, which shows a strong widening in margins.

Unlike a number of stocks on your screens, Ferrari is not a big beneficiary of the overhauled US corporate tax code. While it did have a lower tax rate this year than in the same Quarter of Y 2017, it was down just slightly from 28.5% last year to 27.9% this year.

The results get better

Ferrari’s operating cash flow rose 40% Y-Y, while free-cash flow jumped more than 14%.

It then is no surprise that Thursday shares rose to new all-time highs, and then new highs Friday,  finishing at $137.08 on the day.

Sporting EBIT margins of 25.3% for an automaker is amazingly good. Net profit margins came in at nearly 18%.  Ferrari now boasts a market cap North of $24-B and not to long ago it was about $10-B.

Here is where Ferrari gets the traction

1st, the company’s transition to some of its V12 engine offerings are going very well.

From the press release:

 “This achievement was driven by a 23.5% increase in sales of our 12 cylinder models (V12), while the 8 cylinder models (V8) were in line with prior year. The V12 strong performance was led by the 812 Superfast.”
Ferrari pricing and personalization programs also helped profitability, the bespoke program benefits margins, as we saw that in Ferrari’s Q-1 Y 2018 results.

In Q-2, Ferrari fans can look forward to deliveries of the new Portofino, its hardtop convertible model that replaces the California T.

I look for the Portofino to find higher demand than the California T and to hold its resale value (better).

CEO Sergio Marchionne says that Ferrari’s order book is maxed out for the year and into Y 2019, Just the GTC4 Lusso is available “Everything else is pretty well gone,” Mr. Marchionne said on the conference call Wednesday

A strong global economy is also a driving force.

The global economy is heating up. Confidence is high and each region of the world Ferrari sells to saw a Y-Y increase in shipments. In fact, the Americas region was among the lowest performers, contributing growth of just 4%, I remember when Southern California accounted for about 40% of Ferrari’s sales.

China, Hong Kong and Taiwan was the best-performing region, with shipments up 14%. Overall, shipments rose 6% for the Quarter.
Ferrari has ascended to the status of Aristocrat in the stock world too, nothing else compares!
Symbol Last Trade Date Change Open High Low Volume
NYSE:RACE 137.08 4 May 2018 6.09 134.92 137.45 134.28 848,658
HeffX-LTN Analysis for RACE: Overall Short Intermediate Long
Neutral (0.21) Bullish (0.25) Bullish (0.29) Neutral (0.10)

Have a terrific weekend.

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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