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Ferrari (RACE): What's in the Cards this Earnings Season?

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Ferrari N.V. (RACE - Free Report) is set to report second-quarter 2016 results on Aug 2. Last quarter, the company delivered a positive earnings surprise of 45.16%. Let’s see how things are shaping up for this announcement.

Factors Influencing this Quarter

Ferrari, a former subsidiary of Fiat Chrysler Automobiles N.V. , has witnessed consistent revenue growth over the last 10 years. The company has diversified revenue sources. While its major revenues are generated from the sales of luxury cars, the company also sells engines and Ferrari brand merchandise. Further, it owns a Formula 1 racing team as well as theme parks, which are also good sources of revenue. Moreover, Ferrari is consistently expanding its global presence, which helps boost earnings. The company expects total shipments for 2016 to be over 7,900, higher than 7,664 units recorded in 2015. Improved shipment volumes should boost the company’s revenues and results.

Ferrari has been recording higher sales of V8 supercars but a decline in demand for V12 supercars. V12 supercars are sold at a higher price and therefore, more profitable for the company than V8 supercars. Thus, the change in market demand patterns can adversely affect margins.

Earnings Whispers

Our proven model does not conclusively show that Ferrari is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:

Zacks ESP: The Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. Ferrari’s Earnings ESP is 0.00% because the Most Accurate estimate and the Zacks Consensus Estimate both stand at 46 cents.

Zacks Rank: Ferrari carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

FERRARI NV Price and EPS Surprise

FERRARI NV Price and EPS Surprise | FERRARI NV Quote

Stocks to Consider

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Westport Fuel Systems Inc. (WPRT - Free Report) has an Earnings ESP of +9.09% and a Zacks Rank #3. The company’s second-quarter 2016 financial results are expected to release on Aug 3.

Magna International Inc. (MGA - Free Report) has an Earnings ESP of +0.75% and a Zacks Rank #3. The company’s second-quarter 2016 financial results are expected to release on Aug 5.

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Magna International Inc. (MGA) - free report >>

Westport Fuel Systems Inc. (WPRT) - free report >>

Ferrari N.V. (RACE) - free report >>

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