Ferrari (RACE) has drawn fresh attention after reporting the latest tranche of its share repurchase activity, buying back 62,641 shares in late June as part of a multi year, multibillion euro program.

Ferrari shares have recently picked up pace, with a 1 day share price return of 2.75% and a 30 day share price return of 10.02%. However, the 1 year total shareholder return is down 20.56%, leaving long term investors with a 5 year total shareholder return of 91.53%.

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So with Ferrari’s recent rebound, buybacks and long term track record, are you looking at a luxury icon trading below what it is worth, or has the stock already factored in all the future growth the market expects?

Most Popular Narrative: 9.7% Undervalued

Against Ferrari's last close at $384.97, the most followed narrative sets a fair value of $426.11. This frames the current buyback activity within a richer long term cash return story.

Ferrari's expansion of infrastructure and product offerings, including the new e-building and paint shop for enhanced personalization, is expected to increase production flexibility, supporting revenue growth and improved net margins through operational efficiencies. The launch of six new models in 2025, including the anticipation of the Ferrari full electric, is likely to drive revenue growth, capturing both existing and new customers while expanding Ferrari's electrification journey.

Want to see what sits behind this Ferrari valuation gap? The narrative leans on a specific blend of revenue growth, margin expansion, and a premium future earnings multiple.

Result: Fair Value of $426.11 (UNDERVALUED)

However, Ferrari's narrative can be tested if the 2025 model wave dilutes brand exclusivity or if slower demand for electrified models puts pressure on pricing power.

Another View: Ferrari Through the Earnings Multiple Lens

That 9.7% analyst implied undervaluation for Ferrari sits alongside a very different signal from simple earnings multiples. Ferrari currently trades on a P/E of 36.5x, compared with a global auto industry average of 15.2x and a peer average of 25.6x, while the fair ratio is 17.3x. In plain terms, the stock is priced far richer than both its sector and the fair ratio that the market could move towards, which points to valuation risk if expectations cool.

If you want to see how that rich earnings multiple stacks up in more detail, including how it breaks down versus peers and the fair ratio, See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

With Ferrari's valuations pulling in different directions, it helps to look past headlines and review the full risk reward picture yourself. To see how concerns and potential upsides compare, start with the balance of 2 key rewards and 1 important warning sign

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.