Ferrari sales are recovering and eclipsing pre-pandemic levels. That’s great news for Ferrari, but it doesn’t really help the rest of the auto industry. Ferrari results are a better read for the health of the highest-end consumers around the globe. Monday morning, Ferrari (ticker: RACE) reported 1.11 euros in earnings per share on 1.04 billion euros in sales. That’s about $1.34 in EPS on $1.25 billion in sales. Sales were in line with analyst estimates. Analysts projected about $1.23 in EPS. It looks like a fine quarter. Ferrari stock, however, is down about 0.6% in early trading. The S&P 500 and Dow Jones Industrial Average, for comparison, are up about 0.5% and 0.6%, respectively.
One reason for the muted reaction is the company maintained its full-year 2021 guidance even though it posted better-than-expected results in the first half of the year. That “likely displeased some investors concerned over potential softness in” the second half, wrote RBC analyst Tom Narayan in a Monday report. Still, he rates Ferrari stock at Buy, and his price target is 202 euros or about $240. The read-thru—using Ferrari results to figure out what’s happening with the rest of the auto industry—is, unfortunately, limited. The company shipped 2,685 units in the second quarter. That’s not a lot of cars, although sales divided by units work out to about $466,000 per vehicle. Sill, unit sales rose almost doubled from the second quarter of 2020, which was plagued by Italian Covid-19 lockdowns. Sales volumes in the latest second quarter were also up 0.5% from 2019’s second quarter. For the highest-end car buyers, things are back to normal.
The better read-thru from Ferrari results might be to other luxury good providers. Stock in LVMH Moet Hennessy Louis Vuitton (MC.France) is up 1.7% in overseas trading Monday. That stock is doing a little better than Ferrari shares. LVMH shares are up about 34% year to date, better than the 6% drop in Ferrari stock. Valuation might have something to do with recent trading. Ferrari stock trades for about 39 times estimated 2022 earnings. LVMH stock trades for about 31 times estimated 2022 earnings. Even though things are fine for high-end buyers, investors favor LVMH stock for now.