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Stock Strategist

Ferrari Races to Record Results

The luxury automaker has substantial pricing power.

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We think the market has not fully appreciated  Ferrari’s (RACE) enormous brand power, nor does it completely grasp the wide-moat carmaker’s stability of revenue growth, expansive margins, and economic profitability. This 4-star stock currently trades at a 10% discount to our $52 fair value estimate, offering investors an attractive valuation, in our view.

The Formula One racer and provider of high-end performance vehicles to the world’s wealthy reported second-quarter earnings per share before special items of EUR 0.55, compared with consensus of EUR 0.44 and the prior year’s EUR 0.41. Revenue and profits set record highs and, as a result of the quarter’s strong performance, management tweaked full-year guidance slightly higher for the second time this year.

Richard Hilgert does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.