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