Global demand for electric vehicles and the adoption of robotics in the automotive industry is expected to drive significant growth in the auto industry. Therefore, I think growth investors could add Ferrari N.V. (RACE), Ford Motor Company (F), and Geely Automobile Holdings Limited (GELYY) to their watchlists now.
The automotive manufacturing equipment industry’s growth is driven by a combination of global demand for vehicles, the adoption of automation and robotics technology, increasing demand for electric and hybrid vehicles, and a focus on sustainability and energy efficiency.
The automotive manufacturing equipment market is predicted to grow to
Moreover, governments all over the world are putting in place stricter rules and regulations about emissions, fuel efficiency, and safety. This is driving innovation and leading to the development of new and more advanced automotive technologies.
The global automotive market is expected to grow to $28.70 billion by 2030 at a CAGR of 4.5%. Additionally, the auto parts market is estimated to grow at a CAGR of 3.6% until 2027.
Take a look at the stocks mentioned above:
Ferrari N.V. (RACE)
Headquartered in Maranello, Italy, RACE designs, engineers, manufactures, and sells luxury performance sports cars worldwide. It also provides spare parts, engines, after-sale services, repair, maintenance, and restoration services for cars and licenses its Ferrari brand to various producers and retailers of luxury and lifestyle goods.
RACE’s revenue grew at CAGRs of 18.2% and 10.1% over the past three and five years, respectively. Over the past three years, its EBITDA grew at 24.2% CAGR.
Last month, RACE purchased shares under the €200 million ($217.79 million) share buyback program announced on June 27, 2023. This is the third tranche of the multi-year share buyback program of approximately €2 billion ($2.18 billion), expected to be executed by 2026.
RACE pays an annual dividend of $2 per share, translating to a 0.65% yield on the current share price. Its four-year average dividend yield is 0.63%. The company’s dividend payouts have grown at a CAGR of 17.6% over the past three years and 18.1% over the past five years.
RACE’s trailing-12-month EBIT and net income margin of 25.61% and 19.46% are 252% and 365% higher than the industry averages of 7.28% and 4.19%, respectively.
For the fiscal second quarter that ended June 30, 2023, RACE’s net revenues increased 14.2% year-over-year to €1.47 billion ($1.61 billion), while its adjusted EBIT grew 35.3% from the year-ago quarter to €437 million ($477.08 million).
Also, the company’s adjusted net income and adjusted EPS stood at €334 million ($363.63 million) and €1.83, up 33.1% and 34.6% year-over-year, respectively.
RACE’s revenue and EPS are expected to increase 28.5% and 38.1% year-over-year to $1.58 billion and $1.67 for the fiscal third quarter ending September 2023. Moreover, the company has topped the consensus EPS estimates in each of the trailing four quarters, which is impressive.
RACE’s shares have gained 46.9% over the past year to close the last trading session at $311.97. Over the past six months, the shares have gained 16.9%.
RACE’s POWR Ratings reflect a robust outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It also has an A grade for Quality and a B for Stability. It is ranked #22 within the 55-stock Auto & Vehicle Manufacturers industry.
To access additional ratings for RACE’s Value, Momentum, Growth, and Sentiment, click here.
Ford Motor Company (F)
F develops, delivers, and services a range of Ford trucks, commercial cars and vans, sport utility vehicles, and Lincoln luxury vehicles worldwide. It operates through Ford Blue; Ford Model e; Ford Pro; Ford Next; and Ford Credit segments.
F’s revenue grew at a CAGR of 1.4% over the past five years. Its EBITDA increased at a CAGR of 29.9% over the past three years.
On July 13, 2023, F announced a quarterly dividend of $0.15, payable on September 1, 2023. F pays $0.60 annually as dividends. This translates to a yield of 5.02% at the current price, compared to the four-year average dividend yield of 4.33%.
F’s trailing-12-month CAPEX/Sales of 4.43% is 38.6% higher than the 3.20% industry average. Its trailing-12-month cash per share of 3.73x is 60.5% higher than the 2.33% industry average.
F’s revenues increased 11.9% year-over-year to $45 billion in the fiscal second quarter that ended June 30, 2023. Its adjusted net income increased 6.5% year-over-year to $2.93 billion. Its adjusted EPS increased 5.9% year-over-year to $0.72.
F’s revenue is expected to increase 10.3% year-over-year to $41.01 billion for the fiscal third quarter ending September 2023. Its EPS is expected to increase 50.3% year-over-year to $0.45 for the same quarter. Also, it has surpassed revenue estimates in each of the trailing four quarters.
The stock has gained 2.8% over the past three months to close the last trading session at $11.97.
F has a B grade for Growth and Value. It is ranked #28 in the same industry.
Click here to see the additional POWR Ratings for F (Momentum, Quality, Stability, and Sentiment).
Geely Automobile Holdings Limited (GELYY)
Headquartered in Wan Chai, Hong Kong, GELYY is a Chinese multinational automotive company that engages in the research and development, production, marketing, and sale of vehicles, automobile parts, and related automobile components, as well as provision of related after-sales and technical services.
GELYY’s revenue grew at a CAGR of 9.8% over the past five years, and its total assets increased at a CAGR of 13.2% over the past five years.
On July 11, GELYY and French car maker Renault SA said they would invest up to EUR7 billion ($7.71 billion) in a new equally held joint venture to develop gasoline engines and hybrid technology for automobiles.
The JV is aimed at manufacturing more efficient internal combustion engines and hybrid systems at a time when the focus of much of the automobile industry has been on the capital-intensive transition to purely electric vehicles.
GELYY pays $0.54 annually as dividends. This translates to a yield of 2.25% at the current price, higher than the four-year average dividend yield of 1.71%.
GELYY’s trailing-12-month asset turnover ratio of 1.01x is 1.5% higher than the 1.00x industry average.
GELYY’s revenues increased 26% year-over-year to RMB73.2 billion ($10.10 billion) in the first half of 2023. The Group’s net profit attributable to shareholders of the parent company increased 1% year-over-year to RMB1.57 billion ($21.66 million). Earnings per share came in at RMB14.75.
Street expects GELYY’s revenue to increase 11.2% year-over-year to $23.91 billion for the fiscal year ending December 2023.
The stock gained marginally intraday to close the last trading session at $23.93.
GELYY also has a B grade for Growth, Stability, and Value. It is ranked #29 in the same industry.
Beyond what is stated above, we’ve also rated GELYY for Momentum, Sentiment, and Quality. Get all GELYY ratings here.
What To Do Next?
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RACE shares were trading at $311.51 per share on Tuesday morning, down $0.46 (-0.15%). Year-to-date, RACE has gained 45.42%, versus a 15.58% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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