Ferrari N.V. (NYSE: $RACE) is an Italian car company based in Maranello, Italy, that manufactures luxury sports cars. The company’s cars are quite expensive, with a base price of $150,000 and a top price of up to $1.5 million per unit.
On Tuesday, 07 May 2024, the luxury sports car maker released its first quarter results for fiscal 2024 to a negative market reaction.
Ferrari Releases Mixed Q1 Results
For the first quarter of fiscal 2024, Ferrari reported revenue of €1.59 million, an 11% Y/Y increase but below estimates of €1.66 billion. The company reported net profit improved 19% to €352 million for EPS of €1.95, a 20% improvement from the previous year but below EPS estimates of €2.02.
EBITDA improved 13% year over year to €605 million, with an EBITDA margin of 38.2%, a 60-basis-point improvement. Meanwhile, EBIT improved 15% to €442 million, with an EBIT margin of 27.9%, a 100-basis-point improvement.
The company experienced an FX impact of €26 million, mainly due to the Yuan, Yen, and US dollar.
It ended the first quarter with €321 million in industrial free cash flow, driven by the increase in adjusted EBITDA, partially offset by €195 million in CapEx and a €71 million increase in working capital. Ferrari had €38 million in net industrial cash for the first time, compared to €99 million in net industrial debt at the end of Q4 fiscal 2023.
At the end of the first quarter, it had €1.97 billion in total available liquidity, including €600 million in undrawn credit lines.
Shipments Stagnate
Ferrari’s shipments remained mostly unchanged from the previous year, with 3,560 units for the first quarter of 2024. The EMEA region saw the biggest shipment growth, with 39 more units shipped compared to Q1 fiscal 2023.
Shipments to China, including Taiwan and Hong Kong, saw 79 fewer units shipped for 317 units, while shipments to the Americas grew by 35. The APAC region had no change in shipment volumes from the previous year.
Share Repurchase Program
Under the existing multi-year share buyback program, Ferrari bought back €39.5 million in shares from March 31, 2024, to May 3, 2024.
Full Year Guidance
The company forecasts net revenue of around €6.4 billion for fiscal 2024, an improvement from €6 billion in fiscal 2023. It expects an adjusted EBIT of €1.77 billion and an adjusted EBITDA margin of 27% compared to €1.62 billion and 27.1% in fiscal 2023.
Ferrari expected an adjusted EBITDA of €2.45 billion and an adjusted EBITDA margin of 38% compared to €2.28 billion and 38.2% in FY23. It expects the adjusted diluted EPS to increase 8.7% to €7.50 compared to €6.90 in fiscal 2023.
Q1 Highlights
In the results, Ferrari revealed that it had signed a deal to renew its ongoing collaboration with SK On, a leader in the EV battery industry. It also revealed new sponsorship deals and new models released in 2024, including the 12Cilindri, 12Cilindri Spider, and Roma Spider.
Ferrari Stock Performance
Following the mixed Q1 results, RACE stock sank 4.85% to $406.92 at 12:00 PM EDT on Tuesday. Despite the recent slide, the stock is up 20.36% since the start of the year. Over the past 52 weeks, RACE shares have gained 34.68% compared to the 25.77% gain of the SPX.
The short interest in RACE has increased 9.88% to 1.78 million shares as of April 15 compared to 1.62 million as of March 15. Short sellers hold 12.02% of the floating shares and 0.99% of the shares outstanding.
Analysts’ Outlook on RACE
According to 15 stock analysts, RACE stock has an overall moderate buy rating. They forecast a wide range for the stock, with a high of $512 and a low of $349.28. Their average forecast of $414.91 is a 1.99% upside from the most recent price.
Is RACE a Buy?
Ferrari stock has had a great run since the start of 2024. In late March 2024, the stock hit a new 52-week high of $442.8 amid a sharp decline in the Auto Manufacturers industry, which has seen a 21.80% decline YTD.
At the current price of over $400 per share, it has a foreword P/E of 51.81, which is 10 times more expensive than General Motors (GM). Given the modest growth anticipated in FY24, RACE stock is quite expensive. The company faces challenges, including cost inflation and a lower F1 ranking.
Despite these challenges, CEO Benedetto Vigna remains confident in Ferrari’s performance. He stated, “The start of the year was very positive: revenues and profits recorded double-digit growth with stable deliveries.”
However, given the highly bullish sentiment around the stock, the moderate buy rating accurately represents the stock’s medium-term performance.
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