Ferrari’s Latest Profit Numbers Anchor Its Luxury Investment Ambitions

Since Ferrari was floated off from Fiat in 2016 it has tried to convince investors it should be valued as a high-priced luxury business, not a grubby, industrial manufacturer.

Its latest results show this maker of exotic, luxury sports cars is now firmly in the luxury camp.

With its relentless progress in profits, order books extending for several years, and steady increase in sales never big enough to cut the waiting list to less than a year, Ferrari investors have been rewarded with accelerating share values.

According to Reuters’ BreakingViews column, Ferrari has finally reached the point where it is valued as a luxury company like Hermes, after the shares rose 9% following record results for 2023.

“The shares now trade at 46 times the 2024 earnings per share it expects to deliver. That compares to an average of its global auto peers including Porsche of just 7 times,” said columnist Karen Kwok.

Kwok was using London Stock Exchange Group (LSEG) data. LSEG says it is a leading global financial markets infrastructure and data provider.

Kwok said Hermes trades at a price 47 times expected 2024 earnings, according to LSEG.

Ferrari’s stock price has powered ahead over the last year. From €240 in March 2023, the shares stormed to €340 in November, sank to around €300 in January, then spurted to over €350 after 2023’s financial results in early February.

The shares closed Tuesday at €351.40.

Ferrari earnings before interest, tax depreciation and amortization (EBITDA) rose to €2.28 billion ($2.45 billion) in 2023, and are expected to rise to €2.45 billion this year, and to between €2.5 and €2.7 billion ($2.9 billion) in 2026. Ferrari sees sales worth over €6.4 billion this year with adjusted EBITDA margins above 38%.

Ferrari had guided investors to expect EBITDA for 2023 of at least €2.25 billion, up from a previous and already improved forecast of between €2.19 and €2.22 billion.

Investment bank UBS said Ferrari stands out as a key defensive play in an increasingly uncertain world, and slowing demand in the broader luxury sector.

In a report, UBS said in contrast to other luxury companies, Ferrari has not seen any impact on its client base from the current macroeconomic volatility. Management expects to deliver the high end of its 2026 targets, and personalization trends are set to remain robust.

CEO Benedetto Vigna said Ferrari could look at the high-end of 2026 targets with stronger confidence. In 2023 Ferrari increased sales to 13,663, boosted by the introduction of the four-door Purosangue SUV.

The company has deliberately restrained sales of the Purosangue to a maximum 20% of total sales to make sure it doesn’t become overdependent on an SUV.

For luxury competitors like Aston Martin and its DBX, Bentley with its Bentayga, and the Lamborghini Urus, SUVs have come close to 50% of their sales. Ferrari is determined to keep coupes and roadsters at the heart of its production, said chief marketing officer Enrico Galliera, in an interview with Automotive News Europe in January. A “few hundred” Purosangue’s were delivered in 2023. This year there will be more, he said.

Galliera told Automotive News this restriction follows founder Enzo Ferrari’s edict that “Ferrari will always deliver one car less than the market demands.”

In the 3rd quarter, Ferrari sales of hybrids led traditional ICE models for the first time, accounting for 51% of sales, up from 43% in the previous quarter and 19% in the same quarter of 2022. Ferrari said it was on track to launch its first electric vehicle in the last quarter of 2025. Ferrari is building a new factory in Maranello to make hybrid and electric supercars. It should be ready next June.

As well as range of supercars, Ferrari now makes fat profits offering personalization services and so-called Special Cars with big prices like the SF90 XX Stradale (€770,000-$828,000) and SF90XX spiders (€850,000-$914,000). Its “cheapest” vehicle is the Roma Spider, which sells for $247,000 before tax.