Ferrari is the largest seller of ultra-expensive supercars and has become the most valuable company on Wall Street. The stock price has increased by 40 percent this year, and 736 percent since it went public almost 10 years ago. The surge in its stock has made it the fourth largest automaker worldwide after Tesla, Toyota and BYD.
Ferrari’s rise has been beneficial to all of its investors, including Bailie Gifford Bank of Italy Norges Bank and Blackrock. Exor is a holding company with a number of companies, including Stellantis and Philips. CNH and Iveco.
Ferrari is doing very well
Ferrari is now the largest player in luxury auto industry. It sells brands such as SF90 Spider 12cilindri and Purosangue.
Ferrari is always in demand, unlike other automakers. This is because the company targets wealthy people. There are also long wait lists for many of its brands. Ferrari sells only to the most discerning customers.
In the past 12 months, revenues of this company have increased from $4.2 billion to $6.8billion. The company’s profit has also increased from $787 in 2019 to more than $1.49 in TTM.
Ferrari has, along with Toyota, been hesitant to enter the industry of electric vehicles. The first EV will be available in 2025, with a price tag of $500,000. This is higher than the prices of some of Ferrari’s recent brands. Analysts believe Ferrari’s EVs will be of little interest to Ferrari fans.
Analysts cite Porsche’s recent performance, when it unveiled its Taycan model, known for its depreciation. Ford, General Motors and Volkswagen, traditional automakers who have entered the EV market, have also struggled with market share.
Find out why Ferrari’s stock has been downgraded for the first time in history.
Ferrari performance
Ferrari’s latest financial results show that its revenues grew to EUR1.7 billion during the second quarter and EBITDA margin was 39.1%. The net income of the company grew to EUR413million during this quarter.
The company’s revenues increased after it delivered 3,484 cars in Q2, which is a slight increase over the 3,392 vehicles that were shipped during the same time period in 2017. On the contrary, it’s industrial free cashflow dropped 11.1% from EUR121million to EUR484million.
Ferrari is confident that business will remain good in the months to come. The company expects its revenue to be EUR6.55 Billion this year. This is due in part to the recent order intake of 12Cilindri. The industrial cash flow should be EUR0.95bn.
Value concerns still remain
Ferrari’s hefty value, one of the highest in the automotive industry is the main concern for investors.
SeekingAlpha’s data shows Ferrari to have a non GAAP P/E of 57. This is higher than the industry median of 15, and Ferrari also has a forward P/E of 52. The forward P/E of the company is 52. This ratio also exceeds the median industry value of 18
This is a big number for a business that appears to have sluggish growth and could be losing money on its electric vehicle (EV) division. Ferrari’s forward revenue figure is 12 %, while the data shows a growth of 1.37%.
Ferrari has higher valuation multiples than Nvidia. The latter company, which is a 54 P/E and 44 forward multiple company, only comes in second. Nvidia is experiencing triple-digit growth rates, as opposed to Ferrari. This is due to artificial intelligence.
Analysts estimate Ferrari stock at $485 on average, just a few percentage points higher than the $471 currently in circulation.
Ferrari is a premium brand and deserves to be valued high. The fact that Ferrari is expensive doesn’t mean its stock price will fall. History shows that it is more profitable to invest in expensive companies than laggards.
Ferrari Stock Price Analysis
TradingView RACE Chart
Weekly chart showing RACE’s share price in strong bull market since it went public. The price has increased from $30, a low record in 2015, to over $500.
Recently, the stock has flipped an important resistance level at $441.37 to a level of support. It was a significant point because it was the former all-time highest.
Ferrari’s shares remain above moving averages. They are also above the moving 50-week average. It is exactly 17% higher than this moving average.
The stock is likely to continue its momentum in the lead-up to the next earnings report, which will be released in November. Low interest rates will encourage spending by the wealthy.
The post Ferrari Stock is Overvalued: Is it an Attractive Buy? This post may change as new information is revealed.
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