Ferrari and the Fiat Stub — RACE

Ferrari and the Fiat Stub — RACE by beowulfcap

Warning: Automobile sector definitely does not fall into our circle of competence.

• Ferrari listed in NYSE and finished on 23rd Oct with a market cap of $10.7B
• Absolute top class luxury brand with an earnings of ~$300M in 2014
• Works out to an earnings yield of 3% and a PE of almost 35
• We feel that Mr. Market is valuing the brand of Ferrari very highly. In our opinion, this is counted twice as the earnings already has the pricing power of the brand factored into it
• Even if the company increased the production from 6K pcs to 9K pcs, the earnings yield will still be hovering around the 5% mark.
• It is a low...
  

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