Home 2020 Ferrari (NYSE:RACE) is Worth More than General Motors and Ford

Ferrari (NYSE:RACE) is Worth More than General Motors and Ford

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  • Ferrari’s share price rose 6.4% Monday on the back of strong Q-1 earnings.
  • Its market cap topped $30-B, putting it ahead of General Motors and Ford. 
  • The company revised its revenue and earnings down for the year.

The Maranello, Italy-based luxury sports car maker reported better-than-expected earnings Monday. Despite shutting its factory in March, the company’s total shipments of cars increased 5% to 2,738. Revenue fell only 1% to $1.02-B better than analysts forecast. 

Ferrari (NYSE:RACE) restarted its factories in Maranello and Modena Monday, and are expected to return to full production on Friday, 8 May.

Ferrari makes just 10,000 cars a yr, compared with General Motors’ production of about 7.7-M vehicles last year, investors bet that Ferrari’s storied brand name, prices and profit margins are likely to power the stock through the C-19 coronavirus crisis better than other auto makers. 

Ferrari’s market cap hit $30.1-B in early trading Monday, after settling back to $29.8-M later in the day Monday. General Motors’ market cap fell to under $29.3-B while Ford’s fell to $19.2-B. 

Fiat Chrysler (NYSE:FCAU) spun off Ferrari in October of Y 2015, has seen its market cap decline to under $13-B.

Ferrari’s share price has more than 3X’d since its IPO.

While Ferrari reduced its earnings forecast for the year, and warned of continued weakness from its F1 business and other segments in Q-2, investors really liked its relatively mild revisions to the year ahead.

In April, Ferrari announced a dividend of $1.23/share, an increase of 10%. In its earnings announcement, Ferrari said it was lowering its estimates for net revenue to between $3.7 to $3.9-B, from $4.5-B prior. It cut its forecast for adjusted EBITDA (earnings before interest, taxes, depreciation and amortization to a Top range of $1.31-B from a Top range of $1.43 to $1.56-B.

The value of the Ferrari brand and demand for its sports cars, priced between $215-K and $1-M+, has allowed the company to maintain margins of 23.7%, compared with most automakers, whose margins are well under 5%.

During a call with investors, Ferrari CEO Louis Camilleri said that while there have been “several cancellations” of car orders in the US and Australia, “so far there are no red lights flashing in any geography.”

Ferrari is The Aristocrat of the automotive sector.

Enzo Ferrari’s 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 Key resistance 163.97, and Key support is at 155.27.

Our overall technical outlook is Nutral to Bullish in here

Ferrari finished Monday at 158.53, +9.54 in NY.

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 have called it at it at 200+/share long term, adjusting it to 200/share short term (after the virus) and siding with BAML to 230 long term for now.

Have a healthy week, Keep the Faith!

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