Ferrari Races to Record Results
The wide-moat Formula One racer and exotic sportscar-maker is now fairly priced based on our forecasts for cash flow and returns on invested capital.
Wide-moat-rated Ferrari, (RACE) the Formula One racer and exotic sports car maker, reported earnings per share before special items of EUR 0.59, EUR 0.04 ahead of consensus EPS of EUR 0.55 and EUR 0.09 better than the year-ago EPS of EUR 0.50. For the quarter, revenue growth once again substantially outpaced volume, demonstrating the brand’s vast pricing power. However, the market is quickly catching on to Ferrari’s moatiness, having bid the stock higher by roughly 35% since the beginning of the third quarter. As a result, we view Ferrari's 3-star-rated shares as fairly priced, relative to our forecasts for cash flow and returns on invested capital.
Third-quarter volume was 1,978, versus 1,949 last year, representing only a 1% increase. Even so, Ferrari revenue was EUR 783 million, up 8% versus the prior year at EUR 723 million. Adjusted (before special items) EBITDA was EUR 234 million with an expansive margin of 30.0%, versus EUR 217 million with a margin of 29.5% in the third quarter of 2015.
Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.
Richard Hilgert does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.