Is Ferrari a Buy Now?
Many investors view the automotive industry as highly competitive and highly capital intensive, which can make the industry unattractive. But if investors simply write off the industry for those reasons, you could miss gems such as Ferrari (NYSE: RACE) and Tesla (NASDAQ: TSLA), which have convinced investors they deserve to be valued not as car makers, but as an ultra-luxury producer and a technology company, respectively. Looking at Ferrari specifically, which Morningstar calls "significantly overvalued" trading at a 59% premium to its price target, is the Italian automaker a buy right now? You might be surprised at the answer.
If you're wondering why Ferrari has broken away from the lower valuations of most automakers, one only needs to look at its margin performance compared to peers.
RACE EBITDA Margin (TTM) data by YCharts
Source Fool.com
