Ferrari (NYSE:RACE) released their Q-1 earnings early Tuesday morning, and they are Super with EPS/1.08 easily beat EPS/0.88 consensus estimate and, even more impressive, revenues grew by 13%, not minus as analysts predicted.
Ferrari’s numbers are not just Super, they are informative on several subjects currently on the minds of investors.
I have been a Ferrari fan since I was a boy, an owner since Y 1968, and not just because the Maranello Outfit builds Ferraris, but also because with that personal history I understand the iconic Italian Supercar maker.
Add to that, I follow the company for our firm and have a deep archive on it from F1 and Challenge racing, to the design/building of the modern Supercars, to the Vintage & Classics, to the branding and the stock since the October 2015 spinoff from Fiat-Chrysler (NYSE:FCAU)
It is very interesting that in my commentary and prediction that I have be wrong, but that wrongness is in the racing component and not the stock’s cation since the IPO.
Ferrari is 1 of my best stock calls in the last 4 years.
When Ferrari went public I wrote the at market did not understand this Aristocrat, it did not as traders cut it in half almost immediately post-IPO. Then in July 2016 I called the breakout at 40/share and every other move accurately since. That gainer, the 40 call to the 149 high over the next 1.5 years is nearly 400%.
As it is with high-profile IPOs, initial demand usually outstrips supply, which leads to a surge in the stock in the 1st days of trading.
At those marks the early pre-IPO allocated investors and those that bought at the offering price often take profits, and the stock falls.
Notably, this very often has nothing to do with value or the potential of the company, it is a result of supply and demand dynamics and other things. When that happen the sector analysts begin looking for fundamental reasons for the selling, and every potential negative for the company is explored and published, which serves to increase the selling.
After that action fades, the real story is the focus, and the reason that made Ferrari a high-profile offering in the 1st place start to work in the stock’s favor. The interest in the offering came because Ferrari is an established, Tier 1 worldwide luxury brand, and branding is Key.
This most recent test to the 50-Day MA was technical, it was not caused by worries over the collapse of trade talks between the US and China but that was the headline.
Ferrari’s Q-1 results said trade tensions are meaningless. Ferrari’s shipments to China grew by almost 80% last Quarter, which should also be noted by those worried about a generalized slowdown in China and its possible effects on global growth. Further, Ferrari’s dealer network spread across 60 countries sell the production before it is produced, and not at a discount, but at a premium.
Again, Ferrari is a unique company that makes very special luxury products. And so RACE’s results is good news for all of its investors, plus those who do not own the stock because it signals that trade issues do not effect brands that are embedded in the economic psyche of the worldwide consumer.
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 Bullish to Very Bullish, there is very light resistance now at 143.91, and strong support at 136.66, all of our Key indicators are Bullish-Very Bullish in here. A break above 143.91 augurs 150.00 next.
Latest posts by Paul Ebeling (see all)
- Gold in Rally Mode, Investment Strategy - July 19, 2019
- Ferrari’s (NYSE:RACE) New SF90 Stradale HyperSuper Car, How it Works - July 19, 2019
- Fed’s Balance Sheet is in the Trillions, Rate Cut Signals No Further Shrinking - July 19, 2019