Six motor retailers accelerating on demand for new cars

Wednesday, May 07 2014 by
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Six motor retailers accelerating on demand for new cars

Shares in motor retailers have raced ahead over the past year on expectations that improving consumer confidence would continue to drive sales of new and used cars. With particularly strong demand for 14-plate vehicles in March, those expectations have proved to be correct so far. But while car dealers have been an ideal play on economic recovery, a number of them still flag as reasonably valued, quality stocks with robust momentum behind them. To get an idea about which might be better positioned to keep outperforming, we lined them up against Stockopedia’s Stock Comparison tool.

Sales of new vehicles rose by by 8.2% to 176,820 in April, representing the 26th consecutive month of growth. According to the Society of Motor Manufacturers and Traders (SMMT), that followed a ‘surprisingly strong’ 17.7% rise in March when the new 14-plate was issued (see their chart below). Unsurprisingly, the market has anticipated much of this this growth by driving up the share prices of many quoted motor retailers. To get an idea about which (if any) are now overstretched or poised to move ahead, the Stock Comparison rates each against a host of measures, including their StockRanks, which are a blended range of metrics that analyse Quality, Value and Momentum.

In this case, we compared Cambria Automobiles (LON:CAMB), Caffyns (LON:CFYN), Inchcape (LON:INCH), Lookers (LON:LOOK), Pendragon (LON:PDG) and Vertu Motors (LON:VTU) - where the median share price gain has been 38% over the past year. Don’t forget that Stock Comparisons can be useful for generating ideas but should always be followed up by further research. Subscribers can see the full Stock Comparison here - and see a full list of Auto Vehicles, Parts & Service Retailers here.

Car dealers head-to-head

Based on StockRanks, FTSE SmallCap quoted Lookers takes pole position over its peers here with a rank of 99.7/100. The company stacks up better on a range of quality financial indicators and also has a momentum edge. Despite seeing a weakening in its price against the market over the past month, the…

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Disclaimer:  

As per our Terms of Use, Stockopedia is a financial news & data site, discussion forum and content aggregator. Our site should be used for educational & informational purposes only. We do not provide investment advice, recommendations or views as to whether an investment or strategy is suited to the investment needs of a specific individual. You should make your own decisions and seek independent professional advice before doing so. Remember: Shares can go down as well as up. Past performance is not a guide to future performance & investors may not get back the amount invested. ?>


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Cambria Automobiles plc is a motor dealer, which is engaged in the sale and servicing of motor vehicles. The Company is engaged in the provision of car vehicle sales, vehicle servicing and related services. It is a retailer of new and used cars, commercial vehicles and motorbikes. It operates on a dealership-by-dealership basis. It operates from approximately 30 sites with a total of over 50 dealer franchises. It operates dealerships across England, from the North West through the Midlands, down to Kent in the Southeast and across Exeter in the South West, trading under local brand names, such as Dees, Doves, Grange, Invicta, Motorparks and Pure Triumph. Its brand portfolio comprises Abarth, Alfa Romeo, Aston Martin, Dacia, Ford, Fiat, Honda, Jaguar, Jeep, Land Rover, Mazda, Nissan, Renault, Seat, Triumph, Vauxhall and Volvo. It also provides ancillary services. It offers finance and insurance for the execution of the transaction along with service plans to maintain the vehicle. more »

LSE Price
56p
Change
 
Mkt Cap (£m)
56.0
P/E (fwd)
5.8
Yield (fwd)
1.8

Caffyns plc is a motor retail and aftersales company in the southeast of England. The Company is engaged in the sale and maintenance of motor vehicles, including the sale of tires, oil, parts and accessories. The Company is engaged in new car sales and offers used cars for sale, corporate sales car servicing, car repairs, wholesale parts, Motability and accident repair. The Company is operated and managed on a dealership-by-dealership basis. The Company operates from its own freehold properties, which offers long-term returns. It focuses on approximately three key areas, including used car sales, used car finance and aftersales. The Company represents a portfolio of six franchises, comprising Audi, Seat, Skoda, Vauxhall, Volkswagen and Volvo. The Company operates through approximately seven franchises. The Company offers deals on various cars in over 10 locations across the southeast of England. The Company provides fleets to companies across Sussex, Kent and Hampshire. more »

LSE Price
390p
Change
 
Mkt Cap (£m)
10.5
P/E (fwd)
n/a
Yield (fwd)
n/a

Inchcape plc is a United Kingdom-based automotive distributor and retailer. The Company operates in approximately 30 markets. The Company's segments include Distribution, Retail and Central. The Distribution segment includes regions, such as Australasia, the United Kingdom and Europe, Asia, and Emerging Markets. The Retail segment includes regions, such as Australasia, the United Kingdom and Europe, and Emerging Markets. The Company maintains relationships with a range of retail techniques, including tailored social media campaigns, strategies, Web responses and opportunities. Its Distribution segment is engaged in distribution of new vehicles and parts in Australia, New Zealand, European markets, Asian markets and growing markets. The Retail segment is engaged in sale of new and used vehicles in Australia, mature markets and growing markets together with associated aftersales activities of service, body shop repairs and parts sales. more »

LSE Price
640.5p
Change
-1.5%
Mkt Cap (£m)
2,632
P/E (fwd)
10.5
Yield (fwd)
4.2



  Is LON:CAMB fundamentally strong or weak? Find out More »


7 Comments on this Article show/hide all

Paul Scott 7th May '14 1 of 7
7

Hi Ben,

Bear in mind that Cambria Automobiles (LON:CAMB) has a particularly strong Balance Sheet, with £21.4m of freehold property - bought in the downturn. Management struck me as particularly shrewd. It actually had net cash at 31 Aug 2013 too, very unusual for a car dealership.

I am a huge fan of freehold property. It embeds a great long-term advantage, in that occupancy costs don't rise much over time, whereas competitors face 5-year upward only rent reviews, which will eat away at their profits to a great extent over the long term.
Also remember that Banks are generally happy to lend against freeholds, so they represent a great safety net in a Recession.

It would be great if Stockopedia could add some sort of Balance Sheet comparison tool, in particular to warn of companies with stretched Balance Sheets, and suspicious Balance Sheets, such as companies which mysteriously cannot collect in their profits into cash, but just see Debtors get bigger & bigger.

Regards, Paul.

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herbie47 3rd Jun '15 2 of 7

In reply to post #83202

Yes I would like to some sort of rating about Balance sheets and debt. I see Cambria Automobiles has an Altman Z2 of 1.17 indicating the company is not entirely safe from financial distress, caution should be taken. Which seems surprising considering strong BS and cash.

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Novice Investor 3rd Jun '15 3 of 7

Herbie,

If you click on the Altman Z2 box, the green and red flags are shown.

NI

| Link | Share | 1 reply
herbie47 3rd Jun '15 4 of 7

In reply to post #100323

Yes I know that but I'm saying it seems far more sound than some other companies.


Lets see: Globo has an Altman Z2 of 11.1 indicating the company is likely to be in good financial health.

Globo has 11. Thats my point.

Greenko has an Altman Z2 of 1.08 indicating a serious risk of financial distress within the next 2 years.

I would say Greenko is in a much more serious financial situation than CAMB is at the moment. I would also rather have my money in CAMB than GLOBO, what I'm saying is it would be good to have warning about BS/Debt problems.

| Link | Share
Novice Investor 4th Jun '15 5 of 7
4

Fair enough. I just mentioned it, as you seem to have a history of not thoroughly reading articles, and then asking questions which would have been answered if you had. You certainly seem to have posted quite a lot recently.

Did you for example actually read the details of CAMB's red flags?

NI

| Link | Share
bargainvalue 27th Feb '16 6 of 7

I've thought about PDG as a good investment 2 months ago. However, after the recent declines it is very possible, that the momentum was wrong.

Blog: Bargain Value
| Link | Share | 1 reply
herbie47 27th Feb '16 7 of 7

In reply to post #122588

Motor retailers are very exposed to recessions. I was considering selling Cambria Automobiles (LON:CAMB) for that very reason. Pendragon (LON:PDG) has fallen back more than Cambria Automobiles (LON:CAMB) so could be a buying opportunity?


Had a quick look on comparison: http://www.stockopedia.com/compare/?tickers=LON:PD...

Camb stills looks better and gearing is much less.

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