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Car listings site has several options to help grow earnings

Auto Trader (AUTO) 426.1p

Gain to date: 12.8%

Original entry price: Buy at 377.1p, 17 May 2018

An impressive set of full year results helps get our positive call on online car listings site Auto Trader (AUTO) off to a very decent start.

The numbers on 7 June were slightly ahead of expectations with earnings per share in the 12 month period to 31 March up 15% to 17.76p.

ARPR shows how much the business makes each month on average from the car retailers which use its services.

Although there was no explicit guidance on this alongside the results, the takeaway for at least some analysts was that ARPR could be higher than previously expected.

In March Auto Trader spooked investors by guiding that used car stock would be down with negative implications for ARPR.

When outlining the investment case for the business in our original article we argued that the company had other levers to pull to boost ARPR beyond just having more cars on its site.

Therefore we are encouraged that a new dealer finance product, allowing car retailers to display monthly finance offers on their ads, has enjoyed a strong start.


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