|
Related Topics |
Background and overview of Ferrari (RACE)
Ferrari is one of the most recognized if not the most recognized sports car brand in the world. And they have been part of the FIAT group for many many years. Recently FIAT unbundled a large chunk of their Ferrari shares and Ferrari is now listed on the Italian stock exchange. They have built legendary sports cars including the Enzo Ferrari, Testarossa, Dino, F40, F50, F360, F430 and more recently the Ferrari 458 and 488.
Old Alfa Romeo racer and engineer Enzo Ferrari decided to leave Alfa Romeo and do his own thing. And so started the car brand called Ferrari. Today they a multi billion dollar company with a brand name almost as recognizable as Coke.
Old Alfa Romeo racer and engineer Enzo Ferrari decided to leave Alfa Romeo and do his own thing. And so started the car brand called Ferrari. Today they a multi billion dollar company with a brand name almost as recognizable as Coke.
Scroll over or click on the funnel chart to get more details of RACE's latest financial results.
Financial review:
Ferrari is sitting on a net profit margin of 12.07% for the three months ending June 2016. So essentially for every €100 they receive they make €12.07 in profits after paying all expenses and taxes. Pretty strong net profit margins considering the market they operate in and the number of car brands available for consumers to chose from. Guess they allowed to charge a bit of a premium for the brand name.
Diluted earnings per share came in at €0.52 a share for the quarter. This places Ferrari on a PE ratio of 24.3 (assuming the next two quarters of the fiscal year's earnings will be the same as that of the last quarter). The PE is very demanding for a company, even for a company with such a strong brand name. Ferrari is currently sitting on a dividend yield of 0.96%. Not something to write home about, but as they newly listed and have a mountain of debt to pay off it is understanable that dividend payments wont be at the forefront of directors priority list right now.
Diluted earnings per share came in at €0.52 a share for the quarter. This places Ferrari on a PE ratio of 24.3 (assuming the next two quarters of the fiscal year's earnings will be the same as that of the last quarter). The PE is very demanding for a company, even for a company with such a strong brand name. Ferrari is currently sitting on a dividend yield of 0.96%. Not something to write home about, but as they newly listed and have a mountain of debt to pay off it is understanable that dividend payments wont be at the forefront of directors priority list right now.
Cash generated by operating activities for the 6 months (first two quarters of the fiscal year) amounted to €316million (or roughly €1.68 a share). That makes it about €0.84 a share in cash generated from operating activities per quarter. Showing Ferrari generates cash as fast as their cars accelerate. At the end of the 6 months their cash and equivalents on their balance sheet was €585million (or €3.1 a share in cash).
Pie chart shows number of vehicles shipped per region for Ferrari:
Pie chart shows number of vehicles shipped per region for Ferrari:
For the three months Ferrari shipped a total of 2 214 cars. From the pie charts above it's clear that Ferrari ships the majority of their cars to the the Americas (35% of cars shipped in fact are sent to the Americas). Their home country, Italy being responsible for 4.8% of their sales. The UK with 11% and Rest of Asia Pacific (Japan, Australia, Indonesia South Korea and Singapore) being another big market with cars shipped to this region equaling 14.7%. Interestingly is the Rest of EMEA (Europe Middle East and Africa) was responsible for 9.5% of cars shipped in the three months for Ferrari. We know South Africans love their Ferraris. Here's the proof.
While it all does look rather rosy at Ferrari, the company has a massive amount of debt on it's books, and debt repayments will in all likelyhood hold back massive dividend payments as money is used to pay of debt instead of paying shareholders. Investors should therefore not think that cash generative Ferrari will be sharing all that cash with it's shareholders anytime soon.
While it all does look rather rosy at Ferrari, the company has a massive amount of debt on it's books, and debt repayments will in all likelyhood hold back massive dividend payments as money is used to pay of debt instead of paying shareholders. Investors should therefore not think that cash generative Ferrari will be sharing all that cash with it's shareholders anytime soon.
A few financial ratios for Ferrari (calculated using our Financial Ratios Calculator):
- Debt to Equity Ratio: 38.15 (more than 2 shows high levels of financial leverage). Almost no equity was pushed into Ferrari and mostly debt taken on to fund growth of the business. Therefore this ratio seems extremely high.
- Current Ratio: 0.79 (A measure of liquidity. Less than one signals possible trouble in paying off current liabilities).
- Quick Ratio: 0.66 (Another liquidity measure. Shows how much in liquid assets is available to cover current liabilities or short term debt).
- Return on Assets (ROA): 2.26%
- Return on Equity (ROE): 88.65% (again this is artificially high since not a lot of equity was pumped into Ferrari and must of their funding comes from debt). €2.48billion in debt infact.
- Net Profit Margin: 18.41%
- Dividend Yield: 0.96%
Valuation:
Based on Ferrari's current financial results we value them at between €48.81 and €49.00 We therefore feel that at it's current price it is close to being fully valued. If your dream has always been to own a Ferrari but you cant afford one, well buy you a few Ferrari shares and say that you are co-owner of the most recognized and probably most desired sports car brand on planet earth.
For South African investors, please remember exchange rate movements will have an impact on the value of your Ferrari shares when the value is calculated in Rand terms.
We use our Share Valuation Calculator as guide to valuing shares. We believe in value investing and our above mentioned share valuation is based on the underlying fundamentals and financial statements of the stock in question. Note this is not a binding valuation and investors should do their own research before investing in a specific share. Southafricanmi.com cannot be held liable for any losses incurred, We would accept donations on profits made though ;)
For South African investors, please remember exchange rate movements will have an impact on the value of your Ferrari shares when the value is calculated in Rand terms.
We use our Share Valuation Calculator as guide to valuing shares. We believe in value investing and our above mentioned share valuation is based on the underlying fundamentals and financial statements of the stock in question. Note this is not a binding valuation and investors should do their own research before investing in a specific share. Southafricanmi.com cannot be held liable for any losses incurred, We would accept donations on profits made though ;)