Ferrari’s (NYSE:RACE) Stock Like its Supercars is ‘Super Sexy’

Ferrari’s (NYSE:RACE) Stock Like its Supercars is ‘Super Sexy’

Ferrari’s (NYSE:RACE) Stock Like its Supercars is ‘Super Sexy’

$RACE

Ferrari is a performance machine, and I am not just talking about its Supercars, a look at the financials shows strong performance too.

Traditionally, the world’s  automakers do not show investors and growth, and because of that get a huge valuation discount and have low margins.

The Big Q: That is the sector overview, right?

The Big A: For most all, but not Ferrari, the world’s #1 automotive brand.

Looking at last Quarter for the iconic Italian car maker, earnings of €0.78 beat estimates by €0.06, while revenue grew 1.2% to €831-M ($991.3-M) just shy of the high estimates.

But, hang on, those earnings are up 20% Y-Y from €0.65 in Q-1 Y2017. On revenues, sales actually grew 6.3% adjusted for currency fluctuations.

Just look at how much the bottom line expanded Vs the top line, which shows a big widening in margins.

Unlike many stocks on participants’ screens, Ferrari is not a major 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.

It gets better

Operating cash flow jumped 40% Y-Y to €210-M, while free-cash flow rose more than 14% to €89-M.

So it is no surprise to me that on 7 May shares marked new all-time highs at 141.56, and is now consolidating that Bull leg.

Ferrari’s EBIT margins of 25.3% for an automaker is extremely good, and net profit margins came in at almost 18%.

Ferrari, the Aristocrat of all carmakers, now boasts a market cap North of $24-B, on the manufacture and sales of under 10,000 units annually, with a luxury PE ratio of 38.33/share.

Ferrari pays a dividend, it is a Super Sexy stock, my long term call is 200/share.

Symbol Last Trade Date Change Open High Low Volume
NYSE:RACE 132.53 18 May 2018 -1.20 133.16 133.39 132.31 211,100
HeffX-LTN Analysis for RACE: Overall Short Intermediate Long
Bullish (0.29) Neutral (0.11) Neutral (0.23) Very Bullish (0.54)

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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