DCF Studio

    RACE.MI · MIL · Consumer Cyclical

    Ferrari N.V.

    Also onConsensus Drift

    Implied value per share

    EUR 205.11

    Market price

    EUR 353.75

    Implied upside

    -42.0%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    AdjustedCapital expenditure runs at 14.6% of revenue against depreciation of 10.3%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.
    NoteRisk-free rate is an assumption: USD assumption - no free live source available for this market.

    Current EV/EBITDA of 23.0x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    EUR 205.11-42.0%
    Exit multiple
    EUR 382.73+8.2%
    Market price
    EUR 353.75

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (EUR). Outflows negative.

    0bn1bn2bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayEUR
    LineFY26FY27FY28FY29FY30CAGR
    RevenueEUR 8.0bnEUR 9.0bnEUR 10.0bnEUR 11.2bnEUR 12.6bn+11.9%
    EBITEUR 2.2bnEUR 2.4bnEUR 2.7bnEUR 3.0bnEUR 3.4bn+11.9%
    NOPATEUR 1.7bnEUR 1.9bnEUR 2.1bnEUR 2.4bnEUR 2.7bn+11.9%
    Add depreciation & amortisationEUR 821.1mEUR 919.1mEUR 1.0bnEUR 1.2bnEUR 1.3bn+11.9%
    Less capital expenditureEUR -1.2bnEUR -1.3bnEUR -1.5bnEUR -1.6bnEUR -1.8bn+11.9%
    Less increase in working capitalEUR -349.2mEUR -390.9mEUR -437.5mEUR -489.7mEUR -548.2m+11.9%
    Free cashflow to firmEUR 1.0bnEUR 1.1bnEUR 1.3bnEUR 1.4bnEUR 1.6bn+11.9%
    Discount factor0.95910.88230.81160.74660.6868-
    Present valueEUR 978.9mEUR 1.0bnEUR 1.0bnEUR 1.1bnEUR 1.1bn+3.0%
    Present Value Of The ForecastEUR 5.2bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.20%USD assumption - no free live source available for this market (assumption)
    Equity risk premium6.50%Market assumption
    Beta0.732Reported 0.600, pulled toward 1.0 (Blume)
    Cost of equity8.96%Risk-free + beta x equity risk premium
    Cost of debt4.20%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationEUR 62.1bn95.6% of capital
    Total debtEUR 2.9bn4.4% of capital, book value as a proxy
    Tax rate20.9%Effective, capped at statutory
    WACC8.71%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareEUR 205.11

    86% of EV

    Forecast FCFF, final year
    EUR 1.6bn
    Capex at depreciation, working capital in reinvestment
    EUR 3.3bn
    Less reinvestment at g/ROIC (11.0% of NOPAT)
    EUR -358.6m
    Capitalised
    EUR 2.9bn
    ROIC (reported)
    22.7%
    Terminal value, undiscounted
    EUR 47.7bn
    Terminal value, discounted
    EUR 32.8bn
    Enterprise value
    EUR 38.0bn
    Less net debt
    EUR 1.4bn
    Equity value
    EUR 36.6bn

    Exit at 20.0x EBITDA

    Value per shareEUR 382.73

    93% of EV

    Terminal value, undiscounted
    EUR 93.9bn
    Terminal value, discounted
    EUR 64.5bn
    Enterprise value
    EUR 69.7bn
    Less net debt
    EUR 1.4bn
    Equity value
    EUR 68.2bn

    Spread between methods: 60%.

    Sensitivity

    Value per share (EUR) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.71%270.33291.48317.58350.64393.92
    7.71%221.16234.53250.42269.63293.32
    8.71%185.83194.77205.11217.21231.58
    9.71%159.26165.48172.53180.58189.89
    10.71%138.60143.06148.02153.60159.92

    Outlined: this model. Green text: above today's price of 353.75. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year11.9%26.0%+14.1pp
    EBIT margin27.1%47.1%+20.0pp
    Discount rate8.7%6.3%-2.4pp
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    Yahoo Finance and RBA data. General information, not advice. Methodology.