Ferrari Earnings: Record Revenue, Solid Profitability; Raises Guidance

Wide-moat-rated Ferrari RACE posted third-quarter diluted earnings per share of EUR 1.82, beating the EUR 1.61 FactSet consensus by EUR 0.21 and up EUR 0.59 from the prior year. Third-quarter record consolidated revenue of EUR 1.544 billion (beat consensus by 5%) increased 24%, driven mostly by a 27% increase in cars and spare parts revenue, a 14% increase in sponsorship, partially offset by a 33% decline in engine revenue on reduced shipments to Maserati as contract expiration is this year. The sales increase was supported by a richer mix, increased personalizations, and a 9% volume increase. Excluding foreign currency translation, revenue improved 26% over the prior year.

Unit volume was 3,459, up 9% from 3,188 last year on geographic volume allocation plans, and higher volumes of the 296 and SF90 families, with the 812 Competizione A and the Purosangue in ramp-up. Ferrari delivered 21% volume growth in the Americas, 8% in EMEA, with unit sales to China off 8% and rest of Asia up 2%. Despite inflationary cost pressures, volume, pricing, and mix supported healthy expansion in adjusted EBITDA margin to 38.6%, 380 basis points higher than the 34.8% reported last year.

Management tweaked full-year sales guidance to EUR 5.9 billion from EUR 5.8 billion. The company’s sales visibility remains strong, with orders extending into 2025. Management also expects to deliver over 300 basis points of adjusted EBITDA margin expansion, guiding for a full-year 2023 margin of at least 38%. We had already forecast slightly above management’s prior revenue and margin guidance but made minor adjustments to 2023. Due to the time value of money, we raised our fair value estimate to EUR 259 from EUR 257. While we don’t mind paying up for a wide-moat name like Ferrari, the shares trade in 2-star territory at a 17% premium to our new fair value.