Ferrari SpA designs and manufactures sports cars. The Company offers new and pre-owned vehicles, repair services, warranty programs, financial services, and a variety of apparels. Ferrari participates in formula racing events and serves customers worldwide.
RACE Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for Ferrari NV with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Ferrari NV ranked in the 14th percentile in terms of potential gain offered. Our DCF analysis suggests the stock is overvalued by about 85.33%. The most interesting components of our discounted cash flow analysis for Ferrari NV ended up being:
The stock's equity weight, or the proportion of capital from equity relative to debt, is 94. Its equity weight surpasses that of 90.14% of free cash flow generating stocks in the Consumer Cyclical sector.
The business' balance sheet suggests that 6% of the company's capital is sourced from debt; this is greater than merely 17.18% of the free cash flow producing stocks we're observing.
RACE's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 2%; for context, that number is higher than 42.06% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
For other companies in the Consumer Cyclical that have a similar discounted cashflow valuation profile (and ensuing price forecasts) as RACE, try DRI, RL, MCD, NTZ, and RUTH.
In the midst of the coronavirus pandemic, wealthy Russians rushed to buy luxury cars. Rolls-Royce, Lamborghini and Ferrari sales have increased by four to five percent, the Rossiyskaya Gazeta newspaper reports with reference to JATO Dynamics analytical company.According to the publication, in the first quarter of 2020, luxury car sales increased by 18 percent over the same period of the previous year (72 percent in February and five percent in March). In Moscow, the growth made up 22 percent. "A surge in exchange rates and general uncertainty in connection with the pandemic did not scare customers away from luxury brands - on the contrary, the crisis triggered additional sales even for coupes and convertibles during the low season," Sergey Baranov, company's analyst said. In the summer,...