Ferrari N.V. (RACE): Quant Investors Looking at the 8 Piotroski Score

Ferrari N.V. (RACE) shares have been under recent scrutiny as the Piotroski F-Score of 8 has piqued interest from quant investors. The stocks are rated on a score of 0 to nine based on nine parameters, nine being the best. For every criteria that is met the company is given one point, if it is not met, then no points are awarded. The points are then added up to determine the best value stocks. Piotroski said financial strength could be determined using data solely from financial statements. Since the score is based on recent performance and therefore we can say it points out to the current out performer in terms of profitability and financial improvement on relative basis to its past. The Piotroski F-score was first published in 2000.

As any seasoned investor knows, markets can move up or down in the blink of an eye. Investors who attempt to beat the market without creating a plan may find themselves grasping at straws down the line. Building a plan that included the right level of risk may be different for every individual. Managing risk and staying on top of the stock portfolio can help investors ride out the storm when it eventually rolls in. Anybody who manages their own portfolio knows that it can be extremely challenging at times. Finding a consistent process that works when markets become volatile can be a big help to the investor. Controlling emotions and conducting the necessary research can help the investor make the difficult decisions when they crop up.

Value Composite Three (VC3) is another adaptation of O’Shaughnessy’s value composite but here he combines the factors used in VC1 with buyback yield. This factor is interesting for investors who’re looking for stocks with the best value characteristics, but are indifferent to whether these companies pay a dividend.

VC3 is the combination of the following factors:

Price-to-Book
Price-to-Earnings
Price-to-Sales
EBITDA/EV
Price-to-Cash flow
Buyback Yield

As with the VC1 and VC2, companies are put into groups from 1 to 100 for each ratio and the individual scores are summed up. This total score is then put into groups again from 1 to 100. 1 is cheap, 100 is expensive. Ferrari N.V. (RACE) has a VC3 of 48.

The scorecard also displays variants of the VC3 where the score is calculated for the selected company compared to peer companies in the same industry, industry group or sector.

Return on Assets

There are many different tools to determine whether a company is profitable or not. One of the most popular ratios is the “Return on Assets” (aka ROA). This score indicates how profitable a company is relative to its total assets. The Return on Assets for Ferrari N.V. (RACE) is 0.179326. This number is calculated by dividing net income after tax by the company’s total assets. A company that manages their assets well will have a higher return, while a company that manages their assets poorly will have a lower return.

Volatility 12 m, 6m, 3m

Stock volatility is a percentage that indicates whether a stock is a desirable purchase. Investors look at the Volatility 12m to determine if a company has a low volatility percentage or not over the course of a year. The Volatility 12m of Ferrari N.V. (RACE) is 35.4159. This is calculated by taking weekly log normal returns and standard deviation of the share price over one year annualized. The lower the number, a company is thought to have low volatility. The Volatility 3m is a similar percentage determined by the daily log normal returns and standard deviation of the share price over 3 months. The Volatility 3m of Ferrari N.V. (RACE) is 38.6003. The Volatility 6m is the same, except measured over the course of six months. The Volatility 6m is 35.8855.

Enterprise Value

Ferrari N.V. (RACE) based out of United States and resides in the Consumer Discretionary sector, has a market cap of 23503405 after recently touching 124.59 on a recent bid. Ferrari N.V. (RACE) sees an average of trading volume of 57684. Ferrari N.V. (RACE) competes in the Automobiles industry.

Free Cash Flow Yield (FCF Yield) is the free cash flow of the current year minus the free cash flow from the previous year, divided by last year’s free cash flow. The FCF Growth of Ferrari N.V. (RACE) is 0.021402. Free cash flow (FCF) is the cash produced by the company minus capital expenditure. This cash is what a company uses to meet its financial obligations, such as making payments on debt or to pay out dividends. Looking out to the 5 year FCF yield, this gives investors the overall quality of the free cash flow over a longer period of time. The FCF five year yield for Ferrari N.V. (RACE) stands at 0.019283. Experts say the higher the value, the better, as it means that the free cash flow is high, or the variability of free cash flow is low or both.

Investors may be trying to gauge the current business cycle phase and how that could potentially impact the portfolio. Business cycles can be one way to analyze portfolio performance. Early on in the cycle, profits tend to grow rapidly, sales tend to improve, and activity rebounds. In the middle of a cycle, growth may be peaking, strong credit growth may still be seen, and policy may swing neutral. Toward the later stages, growth may be moderate, earnings may come under pressure, and credit may tighten. Heading into a period of recession, credit may completely dry up, profits may decline sharply, and there may be policy easing. Investors will often have to adjust portfolio holdings that reflect the current state of a business cycle.