• Wondering if Ferrari stock at around US$325 is a premium worth paying or a potential bargain hiding in plain sight? This article walks through the key numbers so you can judge the value for yourself.
• The stock is down about 5% over the last 7 days, 4.3% over the last month, 12.5% year to date and 30.6% over the past year. Over a longer horizon, the 3 year and 5 year returns sit at 13.5% and 71.1% respectively.
• Recent coverage has focused on Ferrari as a high end auto stock, with attention on how its brand strength and pricing power compare with more mass market car makers. This context helps frame why the share price has pulled back while the longer term track record remains positive.
• The stock currently has a valuation score of 2/6, which means it screens as undervalued on 2 of 6 checks. Next you will see how different valuation methods line up on Ferrari, followed by a final section that walks through a broader way to think about value beyond the headline numbers.

Ferrari scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Ferrari Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model takes estimates of the cash Ferrari could generate in the future, then discounts those cash flows back to today to arrive at an estimated intrinsic value per share.

Ferrari’s latest twelve month Free Cash Flow is about €1.34b. Using a 2 Stage Free Cash Flow to Equity model, Simply Wall St projects Free Cash Flow out to 2035, with analyst inputs up to 2030 and extrapolated figures thereafter. For example, projected Free Cash Flow for 2030 is €2.11b, with intermediate years such as 2026 to 2029 ranging from roughly €1.51b to €1.97b before discounting.

Bringing those projected cash flows back to today gives an estimated intrinsic value of €121.74 per share. Compared with the current share price of about US$325, this DCF outcome suggests the stock screens as very expensive, with an implied overvaluation of 167.3% based on this model alone.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Ferrari may be overvalued by 167.3%. Discover 51 high quality undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Ferrari Price vs Earnings

For a profitable company like Ferrari, the P/E ratio is a straightforward way to connect what you pay for the stock with the earnings it currently generates. Investors usually look for a “normal” P/E that reflects both how quickly earnings are expected to grow and how risky those earnings might be, with higher growth or lower perceived risk often justifying a higher multiple.

Ferrari currently trades on a P/E of about 30.9x, compared with an Auto industry average of roughly 18.6x and a peer average of about 43.2x. Simply Wall St’s proprietary “Fair Ratio” for Ferrari is 19.1x, which represents the P/E level suggested by factors such as earnings growth characteristics, industry, profit margin, market cap and risk profile.

This Fair Ratio is designed to be more tailored than a simple peer or industry comparison, because it adjusts for company specific traits instead of assuming all Auto stocks deserve the same multiple. On this basis, Ferrari’s current P/E of 30.9x sits well above the 19.1x Fair Ratio, which indicates that the stock screens as expensive using this approach.

Result: OVERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 19 top founder-led companies.

Upgrade Your Decision Making: Choose your Ferrari Narrative

Earlier it was mentioned that there is an even better way to understand valuation, so meet Narratives, a feature on Simply Wall St’s Community page that lets you link your view of Ferrari’s story to explicit forecasts and a fair value. You can then compare that fair value with the current price as new information arrives. For example, one investor might build a bullish Ferrari Narrative around the higher analyst target of US$500.23, based on expectations for revenue of €8.6b, earnings of €2.0b and a 47.8x future P/E. Another investor might anchor to the lower US$349 target with more cautious assumptions about margins, model launches and the luxury premium. Both Narratives will update automatically as fresh news, earnings and guidance are released.

Do you think there's more to the story for Ferrari? Head over to our Community to see what others are saying!

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.