Ferrari’s earnings show why operational excellence leads to strong investor returns

Find a quality business at a fair price, and the rest will take care of itself. Aston Martin (LON:AML) investors are learning that the hard way.

Two luxury car makers — Ferrari (NYSE:RACE) and Aston Martin reported earnings this week that couldn’t look any more different.

Supercar demand remains strong for all

Ferrari is seeing “remarkable order intake,” and their first SUV model, Purosangue, is running above their “most promising expectations.”

For the full year, they expect sales to be 17% higher than last year despite a worsening auto market.

• Ferrari had $211M in net income in the recent quarter — consistently generating a profit.
• Aston Martin had a $96M loss in the recent quarter — consistently losing money.

Ferrari’s 24% operating income is also far higher than other carmakers. In October, Ford said they lost $827M for the quarter.

But strong operations win the race

Have you seen Tesla’s performance in recent years? Musk is known to be ruthless — but that’s how he gets things done, right? (👋 50% of Twitter employees).

• For years, Aston Martin has had operational issues that have led its stock to fall 97% since going public in 2018.
• While $RACE is up 266% since going public in 2015 — far outperforming the S&P 500 (110%). Still, $RACE is down 26% this year.

That’s peanuts compared to Aston’s 82% decline this year and less than what other carmakers like Ford, GM and Tesla are down by.

The Average Joe: “Love us some strong cash flow. More cash, more options.”