Ferrari’s profit accelerates, leaves share price behind
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Ferrari’s profit accelerates, leaves share price behind

Ferrari, the Italian company behind some of the most famous and exclusive supercars ever made, reported quarterly earnings this week, showing a robust underlying business. The company saw consistent strong demand for its special editions, including the LaFerrari Aperta convertible, which comes with a $2.1 million price tag. It also started putting plans into motion that would see it expand beyond sports cars and into other vehicles.

Ferrari’s share price has risen by 87% so far this year

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SOURCE: Yahoo Finance

Ferrari’s second quarter profit jumped by 24%, year over year. The company said its adjusted earnings before interest, taxes, depreciation and amortization, increased to €270 million, from €217 million in the second quarter of 2016. This was a clear beat against analysts’ expectations of €262 million.

These are great results, but the company’s share price didn’t follow the trajectory set by its profit. The reason? Guidance. Ferrari reiterated its earlier guidance from March (of more than €950 million), when the company’s CEO Sergio Marchionne said the final figure “could” reach more than €1 billion. Investors were hoping to see an upgrade.

Beyond earnings, guidance, and sports cars, Ferrari made a further revelation: it’s branching out into the world of utility vehicles. Or it’s considering it, at least. This is part of a bigger expansion plan which the company is betting will let it double profit by 2022. According to an anonymous source, this expansion plan will also see Ferrari break its self-imposed 10,000 car deliveries per year.

Disclosure

Dominion holds Ferrari in its Global Trends Luxury Fund.


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