Could Ferrari Stock Accelerate after Its Solid 3Q17 Results?

Jitendra Parashar - Author

Nov. 9 2017, Updated 10:31 a.m. ET

Ferrari stock

Ferrari stock (RACE) traded on a positive note in the week ended November 3, 2017. It settled at $117.43 with its weekly rise of 1.6%.

With this, the company’s stock has risen 6.3% on a quarter-to-date basis through November 3. Let’s take a look at some recent updates.

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Solid 3Q17 results

On November 2, Ferrari released its 3Q17 results. The company reported earnings per share of 0.74 euros, or $0.86, in 3Q17. These earnings reflected gains of ~25.4% gains compared to its earnings in 3Q16.

RACE’s 3Q17 revenues rose 6.7% to 836.0 million euros, or ~$975.0 million. While the company’s shipments to North America rose, its shipments to the Greater China (China, Hong Kong, and Taiwan) region fell.

Nevertheless, Ferrari’s 3Q17 profit margins improved significantly due to higher global volumes and product mix. Stronger demand for the company’s V12-engine cars such as GTC4Lusso and LaFerrari Aperta was one of the key reasons for improved profitability. In general, Ferrari’s profit margins from its V12-based cars tend to be higher than its V8-based cars.

2017 outlook raised

During the 3Q17 earnings event, Ferrari also revised its 2017 adjusted EBITDA[1. earnings before interest, taxes, depreciation, and amortization] guidance upward to 1.0 billion euros. The company had previously guided its adjusted EBITDA to ~950.0 million euros.

Investors found this upward revision to be conservative, as its stock fell 2.4% on the day of its 3Q17 earnings release. Despite this minor fall, its stock was still trading with stellar year-to-date gains of ~102.0% on November 3.

Going forward, investors could remain positive on Ferrari due to a consistent improvement in its global shipments and profitability. Ferrari’s margins are far better than mainstream automakers (XLY) such as Fiat Chrysler (FCAU), Ford (F), and General Motors (GM).

On November 1, Ferrari stock posted an all-time high of $121.14, which should act as an immediate resistance level this week. On the downside, an immediate support level lies near $116.30.

Read on to the next part to learn how Harley-Davidson stock traded last week.


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