Ferrari beats on top- and bottom-lines… but static guidance sends share price down
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Ferrari beats on top- and bottom-lines… but static guidance sends share price down

Luxury supercar maker Ferrari reported earnings at the end of last week that should have seen it pull out ahead and take a big win. But in business, as in racing, what “should” have happened doesn’t always translate into reality. The company managed to beat the Street’s predictions on revenue and earnings, pointed out that it was entering a period of strong demand, and managed to continue its long run of financial success. However, investors (who are, perhaps, used to great things from the Italian automaker) expected more: an unchanged guidance range saw the share price head down.

Ferrari shares traded down after earnings, but they’re still up by 62% year to date

Ferrai Aug 5

Source: Yahoo Finance

Let’s elaborate on the financials. Analysts had expected Ferrari to return earnings of $1.03 per share, up from $1.00 in the year-ago quarter. The company pushed past these expectations, delivering earnings of $1.09 per share. The company saw similar outperformance in regards to revenue, returning $1.11 billion for the quarter. That compares with analysts’ expectations (and, coincidentally, the comparable figure from a year-ago) of $1.8 billion.

On the company’s earnings call, CEO Louis Camilleri praised the company “strong results” and said: “we are now sufficiently confident to confirm our guidance at current exchange rates to the top of our range on all metrics.” That wasn’t enough for investors who had hoped for an increase in guidance. It’s also true that the increases Ferrari demonstrated this time around (although streets ahead of a troubled automotive sector) slowed considerably against previous quarters. Countering this fact is Camilleri’s revelation that Ferrari has plenty of orders on its books for the coming months – a display of demand that most of Ferrari’s competitors will be sorely envious of.

Disclosure

Dominion holds Ferrari in its Global Trends Luxury Fund.


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