Ferrari vs Porsche Which Should You Buy?

Ferrari and Porsche are two of the most iconic luxury automobile brands in the world, known for their high-performance vehicles and rich racing histories. Both companies also have stocks that are closely followed by investors seeking exposure to the luxury car market. Ferrari, with its exclusivity and brand cachet, has seen strong growth in recent years, while Porsche, with its wider range of models and strong engineering reputation, also commands a significant market share. Investors looking to capitalize on the luxury car industry may find these stocks an appealing option.

Ferrari or Porsche?

When comparing Ferrari and Porsche, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Ferrari and Porsche.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Ferrari has a dividend yield of 0.54%, while Porsche has a dividend yield of 7.56%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Ferrari reports a 5-year dividend growth of 22.88% year and a payout ratio of 1.80%. On the other hand, Porsche reports a 5-year dividend growth of 0.00% year and a payout ratio of 152.73%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Ferrari P/E ratio at 54.18 and Porsche's P/E ratio at 13.95. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Ferrari P/B ratio is 23.24 while Porsche's P/B ratio is 2.49.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Ferrari has seen a 5-year revenue growth of 0.81%, while Porsche's is 0.57%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Ferrari's ROE at 44.82% and Porsche's ROE at 18.03%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $450.76 for Ferrari and €60.66 for Porsche. Over the past year, Ferrari's prices ranged from $330.15 to $498.23, with a yearly change of 50.91%. Porsche's prices fluctuated between €56.12 and €96.18, with a yearly change of 71.38%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.