On Tuesday, Jefferies maintained its Hold rating on Ferrari (NYSE:RACE) stock with a steady price target of $408. The luxury car manufacturer reported a modest 1% increase in both EBIT and revenue for the first quarter, resulting in a 27.9% margin.
Free cash flow was reported to be approximately €321 million, including a 30% increase in investment spending compared to the same period last year.
Ferrari's vehicle deliveries remained consistent year-over-year, while the average selling price (ASP) rose by 11.5% to €388,000. This increase contributed to an 11% year-over-year revenue growth.
The improvement in EBIT was largely attributed to a favorable product mix, which included the Daytona SP3, as well as increased personalizations and a strategic country mix that saw lower sales in China but higher sales in the Americas.
The company also confirmed its guidance for 2024, noting that current consensus forecasts are slightly more optimistic, expecting a 3.3% higher EBIT than the company's projections. Additionally, Ferrari achieved a net cash position of €38 million during the quarter, which is expected to bolster its ability to return cash to shareholders.
The financial performance indicates that Ferrari is maintaining its profitability and managing to increase its ASP significantly, despite flat unit sales. The mix of products and markets has proven advantageous for the company's earnings before interest and taxes. Ferrari's confirmation of its 2024 guidance suggests stability in its business outlook.
InvestingPro Insights
As Ferrari (NYSE:RACE) continues to navigate the high-end automotive market with precision, recent data from InvestingPro provides additional context to its financial health and stock performance. The company boasts a substantial market capitalization of $77.0 billion, reflecting its strong brand value and market position. With a P/E ratio of 57.32, investors are valuing Ferrari's earnings quite richly, which could be a testament to the company's luxury status and the premium products it offers. Despite a high P/E ratio, Ferrari has shown robust revenue growth of 17.17% over the last twelve months as of Q1 2023, indicating that its strategy of focusing on high-value products like the Daytona SP3 is paying off.
In terms of shareholder returns, Ferrari has raised its dividend for 3 consecutive years, signaling confidence in its financial stability and commitment to rewarding investors. Notably, the company has also managed to maintain dividend payments for 9 consecutive years. For those looking to delve deeper into Ferrari's financials and stock performance, InvestingPro offers a wealth of additional insights. Currently, there are 19 more InvestingPro Tips available, which can be accessed by using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
Moreover, with a dividend yield of 0.62% and a striking 80.57% dividend growth over the last twelve months, Ferrari not only appeals to growth-oriented investors but also to those seeking income. The company's next earnings date is set for May 7, 2024, which will be a focal point for investors to assess whether Ferrari can sustain its financial performance and justify its current market valuation. With a price hovering near its 52-week high, at 96.57% of the peak, Ferrari's stock reflects investor optimism about the company's prospects.
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