Ferrari’s share price hits a record high after solid quarterly earnings
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Ferrari’s share price hits a record high after solid quarterly earnings

The world’s most exclusive luxury supercar brand, Ferrari, posted robust quarterly earnings last week, sending its share price to new heights. The company beat expectations on earnings per share by €0.06, hitting €0.78 for the first quarter. It also saw revenue growth of 1.2%. That might not sound like much – but consider that those earnings are up by 20% year on year. And also, stripping out currency fluctuations, the company’s revenue actually increased by 6.3%.

And, unlike many stocks currently reporting, Ferrari is not a beneficiary of changes to the U.S. tax code: that means all this positivity is a reflection of strength in the underlying business.

Ferrari’s share price set a new record last week

ferrari 080518

Source: Yahoo Finance

Even better than the figures given above, Ferrari’s operating cash flow jumped by a massive 40% from the previous year to €210 million, while its free cash flow rose by 14% to €89 million. With a backlog of orders into 2019, this incredibly robust performance looks here to stay for the near future at least.

Where is the growth coming from? One answer is the company’s transition to some of its F12 engine offerings. According to the press release: "This achievement was driven by a 23.5% increase in sales of our 12 cylinder models (V12), while the 8 cylinder models (V8) were in line with prior year. The V12 strong performance was led by the 812 Superfast."

Looking to the longer term, Ferrari is saying all the right things: it’s developing a sports utility vehicle to capture the uppermost echelons of another market within the auto industry. It’s working on a hybrid car that “you could run silently” (as CEO Sergio Marchionne told the press last month), and its working on fully electric models with a target date of 2022. It’s looking to increase the number of models it produces, but is doing so tentatively enough to maintain its legendary exclusivity.

With all of these positives going for it, Ferrari is in a position where – for the time being – there is literally nothing to dislike.

Disclosure
Dominion holds Ferrari in its Global Trends Luxury Fund.


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