Issue #42

Electric buses, luxury supercars, massive margins — two very different winners, one big opportunity.

The automotive sector is undergoing a split evolution — electrification is accelerating on one side, while ultra-premium performance continues to dominate on the other. And two companies are proving you don’t need to be a consumer EV giant to deliver massive shareholder value.

👉 One is transforming the school bus market with next-gen electric fleets supported by billions in federal incentives.
👉 The other is leveraging exclusivity, customization, and motorsport heritage to create one of the strongest luxury demand engines in the world.
👉 Both are hitting record revenue, expanding margins, and attracting heavy bullish coverage across Wall Street.

Today, we explore how Blue Bird and Ferrari are outperforming their sectors — and why investors are increasingly looking their way as the auto cycle resets heading into 2026.

Blue Bird Corporation (NASDAQ: BLBD)

Blue Bird Corporation (NASDAQ: BLBD) is the only pure-play school bus original equipment manufacturer (OEM) in North America, focused solely on the design, engineering, and manufacturing of school buses. While the company has a decades-long legacy, its investment narrative has shifted dramatically. Today, Blue Bird is best viewed as a leader in specialized clean transportation, driving the rapid adoption of alternative-fuel and electric school buses (ESBs) across the continent. This pivot places it at the center of government-mandated clean energy initiatives.

Business Model and Revenue Streams 📦

Blue Bird's business model is built on two primary, intertwined revenue streams: the Bus segment and the Parts segment.

The Bus segment accounts for the bulk of net revenue and involves the sale of Type A, C, and D school buses, along with extended warranties. Critically, over 50% of its unit sales are now non-diesel, primarily consisting of propane, compressed natural gas (CNG), and, increasingly, electric powertrains. This shift positions the company to command a premium for its specialized, low- and zero-emission vehicles (ZEVs).

The Parts segment focuses on the sale of replacement components. This aftermarket business provides a high-margin, predictable, and long-term revenue stream, as Blue Bird’s buses remain in service for decades. Sales are executed through an extensive, exclusive franchised dealer network, providing a stable distribution channel.

Macroeconomic and Policy Impact:

The company’s performance is highly sensitive to macroeconomic and policy decisions. While rising inflation in raw materials (like steel) and ongoing labor constraints can pressure margins, the positive impact of government policy is currently the dominant factor. Federal programs, such as the EPA's Clean School Bus Program (driven by the infrastructure bill), provide substantial rebates and funding for ZEV adoption. This funding acts as a massive subsidy, creating a multi-year catalyst for electric bus sales growth. The downside risk remains policy uncertainty and potential volatility in commodity costs.

Recent Performance and Corporate Developments 📈

Blue Bird has demonstrated exceptional execution and financial strength, particularly in recent quarters. The company successfully navigated prior supply chain headwinds and inflationary pressures by implementing effective cost controls and strategic pricing actions.

FY 2025 Financial Highlights: 💰

Blue Bird reported its full fiscal year (FY) 2025 results in November 2025, shattering previous guidance and expectations:

• Net Sales: Total net sales reached approximately $1.48 billion.
• Adjusted EBITDA: The company posted a record Adjusted EBITDA of $221 million, resulting in a strong 15% margin.
• Electric Vehicle Momentum: Blue Bird delivered a record 901 electric buses in FY2025, and its firm electric bus backlog remains robust.
• Earnings Beat: For Q4 2025, the company reported adjusted earnings of $1.32 per share, significantly beating the Zacks Consensus Estimate of $0.97 per share, representing a $+36.08%$ surprise.

Strategic Initiatives and Mergers: 🤝

There have been no recent large-scale mergers or acquisitions. The company’s strategic focus is purely on operational improvements, expanding its specialized dealer network (as evidenced by a new Alabama dealership in October 2025), and scaling its electric vehicle manufacturing capacity to meet surging demand. Management reaffirmed its strong guidance for FY2026, signaling confidence in sustained operational execution and demand.

Path to Profitability and Fair Value 🎯

Blue Bird has clearly established its profitability, achieving a GAAP net income of $128 million in FY2025. The company’s path to expanded profitability is defined by operational leverage and maximizing high-margin EV sales.

Sustaining Profitability:

1. High-Margin Product Mix: The company benefits from the premium pricing of its electric and alternative-fuel models. As the ZEV mix grows, overall gross margins are expected to increase.
2. Operational Efficiencies: Investments in lean manufacturing and facility upgrades are anticipated to further improve cost structures and drive the company toward its long-term target of an Adjusted EBITDA margin of $16\%$ on $\sim$ $2$ billion in revenue.

Valuation and Analyst Consensus:

The stock appears to be fairly valued to potentially undervalued. Analyst narratives often suggest that the stock is trading below its fair value, with one widely-cited estimate placing fair value around $62.38$, suggesting a meaningful upside from the current price in the low $50s.

Analyst Estimates and Ratings (Last 30 Days): 📊

Blue Bird carries a highly bullish consensus rating.

• Consensus Rating: The consensus is a "Strong Buy."
• Recent Ratings: In the last 30 days, the company has maintained an extremely favorable average brokerage recommendation, with the vast majority of firms (e.g., 5 out of 8 tracked firms) issuing a Strong Buy rating, and 1 rating a Buy. This reflects strong analyst confidence following the record FY2025 earnings beat and solid FY2026 guidance.
• Price Target: The average 12-month price target is set between $62.86 and $64.60$, implying a potential upside of approximately $20\%$ from recent trading levels.

Investor-Focused Takeaway: Is BLBD Right for Your Portfolio?

Blue Bird offers investors a way to participate in the electric vehicle transition within a predictable, regulated niche market—the school bus industry. The company is performing at record levels, driven by both exceptional operational execution and massive federal tailwinds toward fleet electrification. While short-term commodity price volatility remains a minor factor, the clear path to expanded margins and the overwhelmingly "Strong Buy" analyst consensus make Blue Bird a compelling growth story in the specialty auto sector.

Ferrari N.V. (NYSE: RACE)

Ferrari N.V. (NYSE: RACE) is not a conventional auto manufacturer; it operates more accurately as a pure-play luxury goods company with an unparalleled brand pedigree. The Maranello-based company designs, engineers, produces, and sells luxury performance sports cars. Its core strategy is built on maintaining exclusivity through production caps, ensuring demand consistently outstrips supply, which drives extraordinary pricing power and margin growth.

Business Model and Revenue Streams 📦

Ferrari’s business model is centered on controlling volume to maximize value, a strategic decision that fortifies its brand and financial resilience. Revenue is primarily generated through four segments:

1. Cars and Spare Parts (The Core): This is the largest revenue driver, generated from the sale of vehicles (Sports Cars, GT Cars, and ultra-exclusive Special Series/Icona models) and the high-margin personalization programs. The ability to charge premiums for customization significantly boosts the average selling price (ASP) per unit.
2. Sponsorship, Commercial, and Brand: Revenue from the Scuderia Ferrari Formula 1 team's participation, brand licensing, and retail activities. This segment leverages the motorsport heritage to maintain global prestige and acts as a high-margin growth area.
3. Engines and Other: This segment includes sales from financial services, management of the Mugello racetrack, and, historically, the sale of engines to Maserati (though this contract has largely expired, the segment continues to include residual revenues).

Ferrari’s highly affluent client base makes its financial performance relatively insulated from typical macroeconomic downturns. However, geopolitical trade tensions, particularly any changes to import tariffs (like those in the U.S. or China), can impact margins and distribution logistics, though the company’s strong pricing power often allows it to absorb or pass on such costs. Currency fluctuations, particularly the Euro-to-Dollar exchange rate, also influence reported results since the company operates in Euros but is listed on the NYSE.

Recent Performance and Corporate Developments 📈

Ferrari consistently executes against its targets, leveraging its strong order backlog, which often extends over two years, providing exceptional revenue visibility.

Q3 2025 Financial Highlights: 💰

Ferrari reported robust results for the third quarter of 2025 (reported on November 4, 2025), confirming its strong trajectory:

• Revenue Beat: Revenue reached $\text{\$2.07 billion}$, surpassing analyst consensus estimates of $\text{\$1.94 billion}$.
• Earnings Beat: The company reported earnings per share (EPS) of $\text{\$2.50}$, beating the consensus estimate of $\text{\$2.35}$.
• Strong Profitability: Ferrari achieved a net margin of $22.65\%$ and a robust Return on Equity (ROE) of $44.20\%$.
• FY 2025 Guidance: The company set firm guidance for full-year 2025 EPS, signaling continued confidence.

Strategic Initiatives and Mergers: 🤝

Ferrari has not recently engaged in major mergers or acquisitions. Key corporate developments focus on capital management and product evolution:

• Share Buyback Program: The company is actively executing a multi-year $\sim €2.0$ billion share buyback program, demonstrating a commitment to returning capital to shareholders and reducing share count. The Eighth Tranche of this program was nearing completion as of late November 2025.
• Electrification: Ferrari continues its strategic transition, with its portfolio now featuring a significant mix of hybrid models, demonstrating its commitment to technological leadership without compromising the brand's core performance appeal.

Path to Profitability and Fair Value 🎯

Ferrari is deeply profitable, with industry-leading margins. Its path to increased profitability hinges on two factors: sustained ASP growth and maximizing brand value.

Sustaining Profitability:

1. Innovation and Pricing Power: Management has asserted its confidence in maintaining pricing power by continuously enriching its products with new innovations (e.g., hybrid systems, advanced personalization), ensuring clients are willing to pay a premium for each new model.
2. Product Mix: The successful launch and delivery of high-ASP models, including the new Purosangue GT and exclusive Icona series, is the main driver for margin expansion.

Valuation and Analyst Consensus:

Ferrari trades at a premium valuation (high P/E and P/S ratios) compared to traditional automakers, reflecting its status as a luxury brand with significant growth prospects and defensive characteristics. While some view the valuation as high, the consensus suggests continued upside.

Analyst Estimates and Ratings (Last 30 Days): 📊

Ferrari maintains an overwhelmingly positive consensus rating.

• Consensus Rating: The consensus rating from analysts is "Buy."
• Recent Ratings: In the last 30 days, multiple firms have reiterated or initiated Buy ratings (e.g., Goldman Sachs, UBS, J.P. Morgan), often citing expected ASP growth driven by expensive new vehicles. The stock currently holds an average brokerage recommendation where Strong Buy and Buy ratings account for nearly all recommendations (approximately 15 out of 16 tracked ratings).
• Price Target: The average 12-month price target is approximately $\text{\$499.13}$, with individual targets ranging as high as $\text{\$570.00}$. This suggests a significant potential upside from the current share price in the low $\text{\$400}$ range.

Investor-Focused Takeaway: Is RACE Right for Your Portfolio?

Ferrari is a unique investment that offers high-margin growth protected by an unparalleled brand moat. Its resilience against economic volatility, coupled with consistent execution on earnings and a clear strategy to increase the average price of its limited-volume vehicles, makes it highly appealing. The continued strong analyst support reinforces the long-term luxury growth narrative.

Final Take: Two Auto Innovators Driving Massive 2026 Upside

Ferrari is a unique investment that offers high-margin growth protected by an unparalleled brand moat. Its resilience against economic volatility, coupled with consistent execution on earnings and a clear strategy to increase the average price of its limited-volume vehicles, makes it highly appealing. The continued strong analyst support reinforces the long-term luxury growth narrative.

Final Take: Two Auto Innovators Driving Massive 2026 Upside

From electric buses revolutionizing public fleets to ultra-luxury performance machines breaking all margins, Blue Bird (BLBD) and Ferrari (RACE) are proving that automotive growth doesn’t just come from EV hype — it comes from operational excellence, pricing power, and specialized demand.

These two companies couldn’t be more different, but both are delivering for investors — and Wall Street is paying attention.

🟦 Blue Bird (BLBD) – The Quiet Leader in Electric School Fleets
✔ Record 901 electric bus deliveries in FY2025
✔ 15% EBITDA margin with $2B+ revenue goal
✔ 20%+ upside to consensus target
➤ Best for: Growth investors seeking an under-the-radar EV infrastructure play with policy tailwinds and high-margin execution.

🟥 Ferrari (RACE) – The World’s Most Profitable Car Brand
✔ 23% net margin and 44% ROE
✔ EPS and revenue consistently beat expectations
✔ $500+ analyst price targets on strong hybrid and luxury mix
➤ Best for: Long-term investors wanting premium luxury exposure with defensible pricing power and elite brand equity.

Investor Insight:

🚌 Want EV exposure without the consumer market volatility? → BLBD
​ 🏁 Want luxury growth with earnings consistency and brand moat? → RACE

Two very different lanes. One powerful opportunity. Don't wait for the rest of the market to catch up.

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Happy Trading
​— Team Premium Stock Alerts