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Bear of the Day: Ferrari (RACE)

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Ferrari (RACE - Free Report) has slipped into the cellar of the Zacks Rank since its early May earnings report as analysts continue to lower estimates.

In the past two months, the Zacks Consensus EPS Estimate for this year has dropped from $5.24 to $4.89, representing an 8% decline from 2021.

And next year's EPS consensus has been pared back from $6.14 to $5.78. It's worth noting that both years stood at $5.35 and $6.25, respectively, just 90 days ago.

Much of the downward revisions could be the result of pessimism about global growth that would impact luxury auto sales. Because the Q1 report was solid.

First Quarter Details

Ferrari delivered Q1 quarterly earnings of $1.45 per share, beating the Zacks Consensus Estimate of $1.26 per share. This compares to earnings of $1.34 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represented an earnings surprise of 15%. A quarter ago, it was expected that this luxury sports car maker would post earnings of $1.02 per share when it actually produced earnings of $1.33, delivering a surprise of 30.39%.

Over the last four quarters, the company has surpassed consensus EPS estimates four times by an average of 20%.

Ferrari, which belongs to the Zacks Automotive - Original Equipment industry, posted revenues of $1.33 billion for the quarter ended March 2022, surpassing the Zacks Consensus Estimate by 14.14%. This compares to year-ago revenues of $1.22 billion. The company has topped consensus revenue estimates just once over the last four quarters.

And despite the big revenue beat in Q1, analysts are only expecting 2.46% topline growth this year to $5.17 billion.

Ferrari is trading under 6 times sales since falling over 31% this year. There may be value for this elite auto maker, but during the current global growth slowdown it's best to wait until estimates stop going down and stabilize. The Zacks Rank will let you know.


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