Financial Survey: Ferrari (NYSE:RACE) versus Magna International (NYSE:MGA)

Ferrari (NYSE:RACE) and Magna International (NYSE:MGA) are both large-cap auto/tires/trucks companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, risk, valuation, dividends, earnings, profitability and institutional ownership.

Profitability

This table compares Ferrari and Magna International’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ferrari	22.65%	44.20%	16.58%
Magna International	2.50%	11.88%	4.59%

Insider and Institutional Ownership

67.5% of Magna International shares are owned by institutional investors. 0.5% of Magna International shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Volatility and Risk

Ferrari has a beta of 1.01, indicating that its share price is 1% more volatile than the S&P 500. Comparatively, Magna International has a beta of 1.5, indicating that its share price is 50% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Ferrari and Magna International, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ferrari	1	2	10	4	3.00
Magna International	1	14	3	0	2.11

Ferrari presently has a consensus price target of $480.67, suggesting a potential upside of 27.80%. Magna International has a consensus price target of $50.73, suggesting a potential downside of 9.69%. Given Ferrari’s stronger consensus rating and higher possible upside, equities analysts clearly believe Ferrari is more favorable than Magna International.

Valuation & Earnings

This table compares Ferrari and Magna International”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ferrari	$7.23 billion	12.62	$1.65 billion	$9.90	37.99
Magna International	$42.84 billion	0.37	$1.01 billion	$3.66	15.35

Ferrari has higher earnings, but lower revenue than Magna International. Magna International is trading at a lower price-to-earnings ratio than Ferrari, indicating that it is currently the more affordable of the two stocks.

Summary

Ferrari beats Magna International on 11 of the 15 factors compared between the two stocks.

About Ferrari

Ferrari N.V., through its subsidiaries, engages in design, engineering, production, and sale of luxury performance sports cars worldwide. The company offers range, special series, Icona, and supercars; limited edition supercars and one-off cars; and track cars. It also provides racing cars, and spare parts and engines, as well as after sales, repair, maintenance, and restoration services for cars; and licenses its Ferrari brand to various producers and retailers of luxury and lifestyle goods. In addition, the company operates Ferrari museums in Modena and Maranello; Il Cavallino restaurant in Maranello; and theme parks in Abu Dhabi and Spain. Further, it provides direct or indirect finance and leasing services to retail clients and dealers; manages racetracks; develops and sells a range of apparel and accessories; and operates franchised and owned Ferrari stores. The company also sells its products through a network of authorized dealers operating points of sale, as well as through its website. The company was founded in 1947 and is headquartered in Maranello, Italy.

About Magna International

Magna International Inc. designs, engineers, and manufactures components, assemblies, systems, subsystems, and modules for original equipment manufacturers of vehicles and light trucks worldwide. It operates through four segments: Body Exteriors & Structures, Power & Vision, Seating Systems, and Complete Vehicles. The Body Exteriors & Structures segment provides body and chassis system, battery enclosures, and engineering and testing; and exteriors, including fascia and trims, front end modules, integration panels, liftgate modules, active aerodynamics, engineered glass, running boards, truck bed access products, breakthrough lightings, side doors, and greenhouse products. The Power & Vision segment offers electric drive systems and components, such as emotors, inverters, onboard chargers, gearboxes, and e-clutch; dedicated hybrid drives, dual and hybrid dual clutch, and manual transmissions; AWD/4WD products and rear drive modules; transmission, driveline components, and ICE; far camera module, remote camera heads, interior sensing camera, radars, thermal sensing, and domain controllers; interior and exterior mirrors, camera monitoring system driver/occupant monitoring systems, and smart actuators; forward and rear lighting, and lit grilles/panels/displays; latching system, door modules, charge port doors, power system, hinges, and door handles; and modular and textile folding roofs, and hard and soft tops. The Seating Systems segment provides seat structures, mechanism and hardware solutions, and foam and trim products. The Complete Vehicles segment offers vehicle engineering and manufacturing services. Magna International Inc. was founded in 1957 and is headquartered in Aurora, Canada.