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Is Ferrari Stock a Smarter Investment Than Stellantis Now?
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Key Takeaways
Ferrari lifts EBITDA margins to 38.3% as hybrids rise to 58% of shipments in Q2 2025.
Stellantis posted strong revenues in H1 2025 but margins plunged to just 0.7%.
RACE stock fell 2.6% in a year, while STLA dropped 40.4% on weak performance.
In the auto sector, Ferrari ((RACE - Free Report) ) and Stellantis ((STLA - Free Report) ) stand out for completely different reasons. Ferrari is known for building rare, high-performance cars that often cost millions, while Stellantis makes everyday brands like Jeep, Dodge and Peugeot that sell in huge volumes worldwide. While one thrives on exclusivity, the other flourishes on mass production.
But today, both face the same challenges: moving toward electric vehicles, managing supply-chain issues, and adapting to changing customer needs. Ferrari uses its strong brand and limited supply to keep prices high, while Stellantis depends on large-scale production to keep costs low. Looking at these two strategies side by side helps show which company might deliver stronger financial results and value for investors in the near future.
The Case for RACE Stock
Ferrari's financial strength comes from its ability to increase profitability per car while maintaining strong demand. The company's unique blend of pricing power and customer loyalty allows management to adjust prices without hurting sales, as evidenced by 81% of new cars being sold to existing customers in 2024. Furthermore, its successful pivot to hybrids is a key profitability driver. These vehicles command premium pricing, seamlessly blending performance with innovation, which has helped lift EBITDA margins to an impressive 38.3% in the second quarter. This strategic shift, combined with the company's robust cash flow, ensures that it can continue to invest in new models while rewarding shareholders.
Another advantage is Ferrari’s focus on new models and advanced technology. Cars like the Ferrari Amalfi are attracting strong customer interest, while hybrid vehicles already make up 58% of shipments as of the second quarter of 2025 — compared to just 43% a year ago. This shift not only meets tougher environmental rules but also boosts profitability since hybrids carry higher price tags. By carefully blending tradition with innovation, Ferrari ensures that it stays ahead of industry trends without losing its luxury appeal.
Ferrari also benefits from its powerful brand, which brings in revenue beyond car sales. About 12% of its income comes from things like sponsorships, licensing, and merchandise, creating a steady stream of earnings that’s less tied to car demand. This diversification provides extra protection against downturns in the auto market. Taken together, Ferrari’s exclusivity, innovation, and strong brand presence make it stand out as a company with unusually stable and growing profits.
The Case for STLA Stock
Stellantis, on the other hand, is reeling from weakness in its North America and Europe operations that together account for nearly 70% of Stellantis’ total sales, but both regions remain under pressure. In the U.S., sales continue to trend lower, undermining the outlook despite upcoming product relaunches. Europe is another weak link: pricing is cutthroat, demand is sluggish, and margins are extremely thin. While smaller regions like South America and the Middle East show growth, they are not large enough to offset declines in the company’s two most important markets.
To combat this, Stellantis is leaning on a refreshed product lineup. The company is reviving well-known models like the Jeep Cherokee and introducing new ones, such as the Dodge Charger, hoping to win back buyers in the United States, one of its most important markets. These efforts are expected to help increase sales and improve profit margins in the second half of 2025.
In the first half of 2025, Stellantis generated €74.3 billion in revenues but reported an adjusted operating income margin that collapsed to just 0.7%, down sharply from 10% a year earlier. At the same time, industrial free cash flow came in at a negative €3 billion compared with -€400 million in the prior year. Further, although Stellantis benefits from some U.S. tariff mitigation due to its North American production base, tariffs remain a significant headwind. The company expects a total tariff cost of €1.5 billion in 2025, with €1.2 billion hitting in H2 alone.
Price Performance
In terms of stock price performance, the contrast is stark. Over the past year, RACE is down a modest 2.6%, demonstrating its resilience and investor confidence. In sharp contrast, STLA has seen a significant decline, falling more than 40% over the same period, reflecting the market's concerns about its recent struggles.
Image Source: Zacks Investment Research
Valuation Comparison
The difference in business models is most evident in their valuation. RACE trades at a premium, with a forward price-to-earnings (P/E) ratio of over 41. This valuation reflects the market’s recognition of its stable, high-margin business model and brand power. STLA, on the other hand, trades at just 5x forward P/E, which is a significant discount. This low valuation suggests that the market is pricing in the company’s current operational headwinds and risks.
Image Source: Zacks Investment Research
EPS Outlook
The Zacks Consensus Estimate for Ferrari’s 2025 EPS projects a healthy 14% year-over-year gain, with another 13% increase expected in 2026. This indicates a consistent growth trajectory.
Image Source: Zacks Investment Research
For STLA, the outlook is less optimistic, with analysts forecasting a 54% year-over-year drop in EPS for 2025 and a further 97% decline in 2026, highlighting the severe headwinds it is facing.
Image Source: Zacks Investment Research
Conclusion
Quite clearly, Stellantis faces significant challenges. Its razor-thin margins, negative cash flow, and heavy tariff exposure pose considerable risks. Ferrari, however, operates in a league of its own. Its business model, based on exclusivity, pricing power, and an unassailable brand, provides a high degree of predictability and profitability that few others can match. The company is firing on all cylinders, from new product innovation to a diversified income stream beyond car sales. Consequently, Ferrari, with a Zacks Rank #2 (Buy), is better positioned than Stellantis, which currently carries a Zacks Rank #4 (Sell).
Image: Bigstock
Is Ferrari Stock a Smarter Investment Than Stellantis Now?
Key Takeaways
In the auto sector, Ferrari ((RACE - Free Report) ) and Stellantis ((STLA - Free Report) ) stand out for completely different reasons. Ferrari is known for building rare, high-performance cars that often cost millions, while Stellantis makes everyday brands like Jeep, Dodge and Peugeot that sell in huge volumes worldwide. While one thrives on exclusivity, the other flourishes on mass production.
But today, both face the same challenges: moving toward electric vehicles, managing supply-chain issues, and adapting to changing customer needs. Ferrari uses its strong brand and limited supply to keep prices high, while Stellantis depends on large-scale production to keep costs low. Looking at these two strategies side by side helps show which company might deliver stronger financial results and value for investors in the near future.
The Case for RACE Stock
Ferrari's financial strength comes from its ability to increase profitability per car while maintaining strong demand. The company's unique blend of pricing power and customer loyalty allows management to adjust prices without hurting sales, as evidenced by 81% of new cars being sold to existing customers in 2024. Furthermore, its successful pivot to hybrids is a key profitability driver. These vehicles command premium pricing, seamlessly blending performance with innovation, which has helped lift EBITDA margins to an impressive 38.3% in the second quarter. This strategic shift, combined with the company's robust cash flow, ensures that it can continue to invest in new models while rewarding shareholders.
Another advantage is Ferrari’s focus on new models and advanced technology. Cars like the Ferrari Amalfi are attracting strong customer interest, while hybrid vehicles already make up 58% of shipments as of the second quarter of 2025 — compared to just 43% a year ago. This shift not only meets tougher environmental rules but also boosts profitability since hybrids carry higher price tags. By carefully blending tradition with innovation, Ferrari ensures that it stays ahead of industry trends without losing its luxury appeal.
Ferrari also benefits from its powerful brand, which brings in revenue beyond car sales. About 12% of its income comes from things like sponsorships, licensing, and merchandise, creating a steady stream of earnings that’s less tied to car demand. This diversification provides extra protection against downturns in the auto market. Taken together, Ferrari’s exclusivity, innovation, and strong brand presence make it stand out as a company with unusually stable and growing profits.
The Case for STLA Stock
Stellantis, on the other hand, is reeling from weakness in its North America and Europe operations that together account for nearly 70% of Stellantis’ total sales, but both regions remain under pressure. In the U.S., sales continue to trend lower, undermining the outlook despite upcoming product relaunches. Europe is another weak link: pricing is cutthroat, demand is sluggish, and margins are extremely thin. While smaller regions like South America and the Middle East show growth, they are not large enough to offset declines in the company’s two most important markets.
To combat this, Stellantis is leaning on a refreshed product lineup. The company is reviving well-known models like the Jeep Cherokee and introducing new ones, such as the Dodge Charger, hoping to win back buyers in the United States, one of its most important markets. These efforts are expected to help increase sales and improve profit margins in the second half of 2025.
In the first half of 2025, Stellantis generated €74.3 billion in revenues but reported an adjusted operating income margin that collapsed to just 0.7%, down sharply from 10% a year earlier. At the same time, industrial free cash flow came in at a negative €3 billion compared with -€400 million in the prior year. Further, although Stellantis benefits from some U.S. tariff mitigation due to its North American production base, tariffs remain a significant headwind. The company expects a total tariff cost of €1.5 billion in 2025, with €1.2 billion hitting in H2 alone.
Price Performance
In terms of stock price performance, the contrast is stark. Over the past year, RACE is down a modest 2.6%, demonstrating its resilience and investor confidence. In sharp contrast, STLA has seen a significant decline, falling more than 40% over the same period, reflecting the market's concerns about its recent struggles.
Valuation Comparison
The difference in business models is most evident in their valuation. RACE trades at a premium, with a forward price-to-earnings (P/E) ratio of over 41. This valuation reflects the market’s recognition of its stable, high-margin business model and brand power. STLA, on the other hand, trades at just 5x forward P/E, which is a significant discount. This low valuation suggests that the market is pricing in the company’s current operational headwinds and risks.
EPS Outlook
The Zacks Consensus Estimate for Ferrari’s 2025 EPS projects a healthy 14% year-over-year gain, with another 13% increase expected in 2026. This indicates a consistent growth trajectory.
For STLA, the outlook is less optimistic, with analysts forecasting a 54% year-over-year drop in EPS for 2025 and a further 97% decline in 2026, highlighting the severe headwinds it is facing.
Conclusion
Quite clearly, Stellantis faces significant challenges. Its razor-thin margins, negative cash flow, and heavy tariff exposure pose considerable risks. Ferrari, however, operates in a league of its own. Its business model, based on exclusivity, pricing power, and an unassailable brand, provides a high degree of predictability and profitability that few others can match. The company is firing on all cylinders, from new product innovation to a diversified income stream beyond car sales. Consequently, Ferrari, with a Zacks Rank #2 (Buy), is better positioned than Stellantis, which currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.