• If you are wondering whether Ferrari's current share price lines up with its underlying value, this article breaks down what the numbers are saying without the noise.
• The stock last closed at US$327.20, with returns of 0.6% decline over the past week, 13.9% decline over 30 days, 12.0% decline year to date, and 22.9% decline over 1 year, compared with gains of 23.4% over 3 years and 58.4% over 5 years.
• These mixed returns have kept valuation firmly in focus for many investors, especially as longer term holders are still sitting on gains while more recent buyers are facing declines. Recent coverage has centered on whether the share price now reflects the business quality or whether sentiment has simply swung too far in the short term.
• Ferrari currently has a value score of 2 out of 6, based on how many of our valuation checks flag the stock as undervalued. The sections ahead will compare different valuation methods before finishing with a broader, more useful way to think about what the market is pricing in.

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, or DCF, model projects a company’s future cash flows and then discounts them back to today’s value to estimate what the whole business might be worth right now.

For Ferrari, the model used is a 2 Stage Free Cash Flow to Equity approach based on cash flow projections. The latest twelve month free cash flow is about €1.34b. Looking ahead, Simply Wall St uses analyst inputs for the next several years and then extends those estimates further out. By 2030, the projected free cash flow is €2.09b, with intermediate yearly projections between 2026 and 2035 stepping up gradually according to the supplied schedule.

When all of those future cash flows are discounted back to today, the DCF model suggests an intrinsic value of about €112.64 per share. Compared with the recent share price of US$327.20, this output implies the stock is very expensive on this cash flow view. The intrinsic discount figure indicates it is about 190.5% overvalued.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Ferrari may be overvalued by 190.5%. Discover 62 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 useful way to relate what you pay for each share to the earnings the business is generating today. It gives a quick sense of how many dollars investors are currently willing to pay for one dollar of earnings.

What counts as a “normal” P/E depends on how the market views a company’s growth prospects and risks. Higher expected growth or lower perceived risk typically supports a higher multiple, while slower growth or higher uncertainty usually lines up with a lower one.

Ferrari currently trades on a P/E of 32.07x. That sits above the Auto industry average of 17.07x, but below the peer group average of 41.46x. Simply Wall St’s Fair Ratio for Ferrari is 20.70x. This Fair Ratio is a proprietary estimate of what Ferrari’s P/E might be given its earnings growth profile, industry, profit margins, market cap and risk factors, rather than just comparing it with broad industry or peer averages.

Because the current 32.07x P/E is well above the 20.70x Fair Ratio, the multiple approach also points to the shares trading on the expensive side.

Result: OVERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 20 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. On Simply Wall St’s Community page, Narratives let you link your view of Ferrari’s story to your own revenue, earnings and margin assumptions, turn that into a fair value, and then compare it with the current share price. Each Narrative updates automatically when fresh news or earnings arrive. One investor might build a bullish Ferrari Narrative that lines up with a fair value near the higher analyst target of about US$494, while another might lean on a more cautious story that points closer to the lower end around US$345. This gives you a clear, side by side sense of how different perspectives translate into different estimated values and decision points on whether the shares look expensive or attractive to you right now.

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.