Shares of automaker Ferrari (RACE +0.66%) jumped as much as 11.8% in trading this week after the company reported fourth-quarter 2023 financial results that topped analyst estimates. Shares held their gains and were still up 10.9% for the week at 3 p.m. ET on Friday.
More with less
In the quarter, Ferrari sold 2% fewer cars than a year ago at 3,245 units, but revenue was up 11% to 1.52 billion euros, and earnings per share jumped 34% to 1.62 euros. Analysts expected 1.51 billion euros in revenue and earnings of 1.50 euros per share.
NYSE: RACE
Key Data Points
For the full year, Ferrari sold 13,663 vehicles, up 3% from a year ago, and revenue was up 17% to 6 billion euros. This shows the company's ability to lean into exclusivity in the auto business and command ever-higher prices.
Where does Ferrari go from here?
Guidance for 2024 continued the expected strong results, with revenues expected to be over 6.4 billion euros and adjusted earnings per share rising from 6.90 to 7.50 euros.
It didn't hurt that as earnings were released, it was confirmed that F1 driver Lewis Hamilton will join Ferrari in 2025. He brings an incredible amount of value to the brand as one of the most well-known people in the world.
The challenge for investors now is how much of a premium the automaker should trade for. As of this writing, Ferrari's market cap is $71.2 billion, or 66 billion euros, meaning the company is worth about 10x sales. That's usually a price reserved for companies growing extremely quickly or generating very high margins, not a relatively low-margin automaker.
That valuation is the one thing that will keep me out of the stock today.
