Ferrari shares decline after earnings beat, guidance reiteration
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Ferrari shares decline after earnings beat, guidance reiteration

Third-quarter earnings were always going to be a dicey time for luxury supercar maker Ferrari. The company has had a rough year following the sudden and unexpected death of its superstar CEO Sergio Marchionne, which rocked investor sentiment. Add to that the fact that – since 2015, when Marchionne took the company public – Ferrari’s share price has more than doubled through a succession of record earnings, and the picture becomes even more troublesome: Ferrari is working against powerful comparables. Despite these difficulties, the company’s share price is still up by 10% over 2018 so far.

Ferrari’s share price took a hit after earnings, but is still squarely in the black for 2018

ferrari g 091118

Source: Yahoo Finance

Ferrari beat the Street’s expectations on earnings, delivering $0.90 per share for its third quarter. That overshot consensus estimates of $0.88, and was a 2.27% rise against earnings in the year-ago quarter ($0.87 per share). Revenues were roughly flat, coming in at 838 million euros, despite shipments increasing by 10.6%. This disparity between revenue and shipments is a direct result of customers showing a preference for Ferrari’s entry-price models.

This set of earnings is just the second to be delivered by Sergio Marchionne’s successor, Louis Camilleri. Camilleri has done a solid job of reassuring investors that Ferrari can continue to thrive despite the loss of his predecessor, and mid-term plan, unveiled in September, was widely regarded as striking just the right tone. In it, he promised 15 new models, including hybrids, a utility vehicle, and special editions, and said that these would help to almost double earnings by 2022.

Despite minor successes in the quarter, Ferrari reiterated its full year profit guidance for 2018, which many analysts consider unchallenging. The company’s share price traded down slightly as a result.

Dominion holds Ferrari in its Global Trends Luxury Fund.

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