All You Need to Know about Ferrari’s 1Q16 Earnings



Ferrari’s 1Q16 earnings

The Italian luxury supercar maker Ferrari (RACE) released its 1Q16 earnings report on May 2, 2016. The company reported solid adjusted EPS (earnings per share) of 0.41 euros, or $0.45. This was higher than the EPS of 0.36 euros, or $0.39, in the previous quarter.

All You Need to Know about Ferrari's 1Q16 Earnings

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Market reaction

On the day of the earnings release, Ferrari’s stock plunged by ~2.9% to $44.53 per share. Despite strong earnings, this fall could be primarily due to the higher expectations of investors for Ferrari, one of the most valuable brands in the world. These high expectations already drove 10% price gains in Ferrari’s stock in April 2016.

1Q16 stock performance

In 1Q16, the fight between the bulls and bears intensified on Wall Street. This led to a broader market sell-off at the beginning of 2016. However, in March 2016, the S&P 500 Index witnessed a sharp recovery that erased the losses, and it closed the quarter with a 0.8% rise. Ferrari witnessed negative price action of 13.1% during the first quarter of 2016.

Despite the broader market recovery in March, the majority of the auto industry (IYK) stocks couldn’t end 1Q16 in the green. Increased concerns that US auto sales may have already peaked amid global economic weakness could be a reason why auto companies underperformed the broader market during this period. However, it’s important to note that a possible slowdown in US auto demand may not affect Ferrari as much as it can affect other mass-market automakers. This is because Ferrari serves to a niche—the richest section of the population.

Among the other auto companies, General Motors (GM), Fiat Chrysler Automobiles (FCAU), and Ford (F) ended 1Q16 with returns of -7.6%, -12.3%, and -4.2%, respectively.

Series overview

In this series, we’ll take a closer look at Ferrari’s 1Q16 revenues and profitability. We’ll find out what factors drove the company’s 1Q16 earnings. We’ll also see how Ferrari is progressing so that it can meet its fiscal 2016 guidance. Toward the end of the series, we’ll take a look at some important factors that could be driving the company’s valuation in 2Q16.

Let’s start with Ferrari’s 1Q16 revenues.


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