What Has Ferrari (RACE) Stock Done For Investors?

Ferrari (NYSE: RACE) has a rich history in the automotive industry. It's known for its technical and design expertise and racing legacy that contribute to the supercars that it manufactures and sells worldwide. The company's vehicles can be viewed as collector's items, which supports Ferrari's ongoing success.

But what has this top automotive stock done for investors in the past?

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Looking at Ferrari's performance

In the past one-, three-, and five-year periods, shares generated total returns of (14%), 82%, and 93%, respectively (as of Dec. 8). Only the three-year gain came up ahead of the S&P 500, but the outperformance is extremely tiny, amounting to less than a tenth of one percent.

Ferrari pays a dividend that equals nearly three euros per share today. This is included in the total returns figures just mentioned.

Ferrari's stock took a major 15% one-day hit after the leadership team revealed long-term financial targets at its October Capital Markets Day that disappointed investors. This drastically altered the stock's performance metrics. Executives' forecast implied revenue compound annual growth of 5% between 2025 and 2030, with operating income expected to increase at an annualized clip of 6%. These projections come up well short of what Ferrari achieved historically.

It pays to adopt a long-term mindset

Ferrari shares have still compounded investor capital at a stellar rate over the very long term. Since the initial public offering in October 2015, the stock has produced a total return of 673%, significantly greater than the S&P 500's 306%. And this should force shareholders to pay attention to the company's underlying fundamentals, which remain strong.

Ferrari's brand is its most valuable asset, and it helps support the argument that the business sells luxury goods, not just typical cars. Only 799 units of the recently launched F80 are being made, with all of them already pre-ordered. The starting selling price of the limited-run model is an astounding $3.7 million. Ferrari clearly has pricing power.

Volume is deliberately kept under control, as unit sales rose by just 0.5% year over year in Q3 (ended Sept. 30). However, this strategy of exclusivity hasn't prevented Ferrari's financial numbers from climbing steadily over time. Revenue and net income increased 12% and 17%, respectively, between 2019 and 2024. Based on these data points, perhaps management was being conservative with the latest outlook it provided.

Ferrari stands out in the automotive industry. And now that its shares trade 25% below their peak, patient investors might want to take a closer look.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool recommends Ferrari. The Motley Fool has a disclosure policy.