Equity valuation Ferrari N. V.

Abstract

This dissertation aims to determine the intrinsic value of the luxury Italian car manufacturer Ferrari, a company with an extensive history and reputation in the high-end automotive industry. Once the intrinsic value per share is calculated, it will be compared to the market price at the date to provide an investment recommendation (sell/hold/buy). The first step involved identifying the most used valuation methods and determining which is most suitable for this company. It was concluded that the Discounted Cash Flow and multiples valuation (LTM & NTM) methods are the most appropriate. Subsequently, a market analysis was conducted, followed by a detailed qualitative and quantitative analysis of the company. After performing a financial analysis of the industry and the company, focusing on the last six years (instead of the standard five years to mitigate the impact of COVID-19), the corresponding projections were made in the DCF model, the change in working capital was determined, and the free cash flow to the firm was calculated (as explained in the literature review). The DCF analysis yielded an intrinsic value of 152€, which, when compared to the market price of 394€ as of April 15th, 2024, indicates a difference of 159%. The LTM multiples valuation produced a higher result of 281€, which also shows a difference of 40% when compared to the market price. Both results indicate that the market is currently overvaluing the stock, suggesting a "sell" signal.

Date of Award	27 Jun 2024
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	José Carlos Tudela Martins (Supervisor)