Interactive Investor

ii view: Auto Trader fine-tunes its product

6th June 2022 15:28

Keith Bowman from interactive investor

Shares for this FTSE 100 company are down around a fifth in 2022. We assess prospects. 

Full-year results to 31 March 2022

  • Revenue up 65% year-over-year and up 17% from 2020 to £433 million
  • Pre-tax profit up 91% year-over-year to £301 million
  • Final dividend up 10% year-over-year to 5.5p per share
  • Total dividend of 8.2p per share for the year
  • Net cash of £51.3 million at end of March, up from £15.7 million a year ago

Chief executive Nathan Coe said:

"This year marks the best financial and operational performance in our history, which is credit to our people and the partnerships we have with our customers.

"We are well placed to continue growing our core business while establishing the products that retailers will need to shift more of the car buying journey online, on Auto Trader.

"Despite the current high levels of economic uncertainty and industry change, we enter the year with good reason for both confidence and optimism."

ii round-up:

Auto Trader (LSE:AUTO) provides an online digital automotive marketplace to both individual consumers and company dealerships alike.

It looks to bring together both buyers and sellers of vehicles charging fees to sellers to advertise their product. Both second-hand and new vehicles are bought and sold on its platform. 

Employing over 900 people, its website attracts more than 60 million visits each month.

For a round-up of these latest results, please click here.

ii view:

Started in 1977 as a small regional classified advertising magazine called Thames Valley Trader, Auto Trader is today an automotive marketplace website where total minutes spent on the site now average 588 million per month, up 5% from its last financial year. 

For investors, a cost-of-living crisis for consumers and an uncertain economic outlook both warrant consideration. A wealth of competitors such as Cazoo and Cinch are not standing still, while rising interest rates may also hinder some consumers in borrowing money to fund the purchase of their next vehicle. 

On the upside, the company’s established position makes it tough to overlook, even in an increasingly competitive environment. Financial performance, customer numbers and consumer engagement are all at record levels. Investment in product innovation and bolt-on acquisitions are also ongoing, including a recent purchase to grow its vehicle leasing proposition, while confidence in the outlook appeared to be expressed via a 10% increase in the final dividend compared to last year. On balance, and while some caution remains sensible, a consensus analyst fair price estimate of almost 700p per share appears to offer room for longer-term optimism.   

Positives: 

  • Strong market position
  • Investing in product innovation

Negatives:

  • Uncertain economic outlook
  • Competition not standing still

The average rating of stock market analysts:

Cautious buy

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