Shares for the future: a FTSE 100 company to fear and respect
It’s had little to cheer in the past 12 months and drops down this 30-strong list of shares, but analyst Richard Beddard still considers it worthy of long-term investment.
17th July 2026 15:04
by Richard Beddard from interactive investor
Since it listed in 2015, car marketplace Autotrader Group (LSE:AUTO) has been a great business. Looking forward though, risks are accumulating.
In May, I incorporated AI risk into Autotrader’s score. The previous December, the poor reception of the company’s Deal Builder product spooked me. Now, we can incorporate information from the company’s annual report for the year to March 2026.
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What dominance looks like
Autotrader earns about 80% of revenue from car dealerships. They subscribe to place advertisements on the platform and purchase additional features like prominence packages to boost ads in listings.
The remaining 20% of revenue comes from a smorgasbord of home traders, private sellers, logistics companies which bid to deliver vehicles, insurance and loan finance partners and display advertising from manufacturers.
The more listings, the more attractive Auto Trader is to buyers. The more buyers, the greater the incentive for dealers to list stock.
This mutually reinforcing network effect is key to understanding how Autotrader became the dominant car advertiser before it ceased being a magazine in 2013.
Today, Autotrader claims six times as much time is spent by potential car buyers on Autotrader as all its main competitors combined. It has an audience 11 times the size of its biggest competitor (a collection of four brands) and 22 times the next biggest individual brand.
Source: Autotrader full-year results presentation 2026 (Comscore MMX® Multi-Platform, Total Digital Population, Total Audience, Average Minutes, April 2025 – March 2026, UK)
Big Tech and disaffected dealers
Before I write about Autotrader, I search for cars using AI chatbots to see whether they are a viable way to find a car. They helpfully narrow down my options but default to high level aggregator pages (principally Autotrader and CarGurus) when prompted for links to actual deals.
AI may already be good enough for some of us when it comes to the kind of advice Autotrader is famous for, but it doesn’t provide the comprehensive listings that earn Autotrader its revenue.
Autotrader acknowledges two risks. The first is disintermediation, if AIs send buyers directly to dealers or other aggregators. The second is loss of revenue through prominence products if AIs send buyers directly to listings on Autotrader.
The company relies on its brand rather than search engines, AI chatbots, or paid ads to draw customers in. 80% of visits were direct to the website or app or from a search for “Autotrader” in 2026. If Autotrader can keep dealers and customers on its app and website, it doesn’t have a problem.
It may be able to do this by employing technical tricks to stop AIs and search engines linking deeply into its site, and by making its platform so good buyers and sellers cannot ignore it.
Autotrader already gives unrivalled access to realtime data: trends, demand forecasts and valuations that may simply be irreproducible. Recent new features include “Buying Signals”, which tell dealers which buyers are most likely to make a purchase based on their location and Autotrader activity, and “Co-Driver”, which reduces the time it takes to list vehicles using generative AI trained on Autotrader’s proprietary data.
There may be limits to how far it can go though. Deal Builder extends Autotrader’s capabilities, allowing customers to reserve cars, arrange part-exchange and insurance and delivery online.
The early stages of the roll-out caused a backlash from dealers who organised on social media and threatened to quit Autotrader. Some did, forcing the company to roll back aspects of Deal Builder.
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Autotrader has put power back into dealers’ hands by giving parity on its website and app to options enabling buyers to contact sellers directly. It has downgraded online reservation to a request feature requiring dealer assent. It has also set up customer advisory panels to vet future products and make sure it doesn’t overstep again.
There have been lasting commercial repercussions. The number of forecourts on Autotrader has been pretty stable in recent times but they fell 1.7% in the second half of the financial year when Autotrader started the roll-out. This, Autotrader admits, was partially due to Deal Builder.
There are currently no comparable alternatives for disaffected dealersr’ marketing spend, but in addition to the potential AI threat, they may in future find a home at Amazon Autos, which is expected to launch in the UK in 2026. Currently, Amazon.com Inc (NASDAQ:AMZN) is rolling out a listing subscription business with Deal Builder-ish features across the US.
The botched launch also damaged Autotrader’s culture. Employee engagement, a measure of who is proud to work for Autotrader, dropped from 91% in 2025 to 72% in 2026. Deal Builder was a factor, although the company also blamed an office move and restructuring. Employee attrition increased from 10% to 16%.
Auto Trader’s dominance of online advertising probably means that it cannot grow faster than the market unless it can do more for dealers. In theory, features add value, which Autotrader can charge more for.
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The Deal Builder debacle shows there may be limits to this strategy. Meanwhile, other strategic moves are also making slow progress.
The increasing cost of cars, especially electric vehicles (EVs), means more consumers are considering leasing as an alternative to buying. The company moved to cover this development when it acquired Autorama, an online leasing platform in 2021. Now Autorama is integrated into Autotrader, the company believes it will make its maiden profit in the year to March 2027. It contributed 5% of revenue in 2026.
Meanwhile, Autotrader grew new car sales on the platform through direct relationships with manufacturers, another ambition. Manufacturer and Agency sales grew, but this includes display advertising and new car listings, and only accounted for 2% of revenue in 2026.
Autotrader by the numbers
Revenue at Autotrader is determined by the price of subscriptions, product sales and the amount of stock listed.
The company has increased prices 5.5% in its annual event for the current financial year, less than recent years, because dealers are facing more challenging times after a post-Covid recovery. It has new products in the pipeline.
But Autotrader expects the number of forecourts to drop again in 2007 by between 1% and 2%. Analysts forecast another sub-par year of 4% revenue growth.
Nevertheless, the company’s financial history is almost impeccable. The only pink highlight in my dashboard is net financial obligations (debt and leases). It has turned positive, apparently in a big way. Debt is over 100% of operating capital.
The size of the debt is an illusion, because Autotrader requires little capital to operate. The net liability is £205 million, which is less than Autotrader earned in cash terms in 2026. It was created because Autotrader bought back £371 million worth of shares. In other words, if cash flow is sustainable, which it probably is at least in the medium term, the debt could easily be repaid simply by switching off the buyback.
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Autotrader is reducing the number of shares in issue because it believes the share price undervalues the business. Fewer shares means shareholders each have a bigger claim to the company’s profits.
Scoring Autotrader: fear and respect
Despite misgivings about Autotrader’s monopoly position and the possibility it is squeezing customers, I respect the company. For many car buyers, browsing Autotrader is a passion. Autotrader has acknowledged mistakes in the Deal Builder roll-out. Maybe it can win back the trust of dealers and employees.
But the dealer rebellion suggests Autotrader’s fat margins may be resented by a significant number of dealers, and this presents a challenge to the company’s strategy to bring more of the sale on to the platform.
Autotrader may also be vulnerable to big tech. Technological disruption in the form of AI and the high cost of EVs and the increasing popularity of leasing, could provide the opportunity for rivals to make a dent in its monopoly.
Autotrader has grown revenue at a compound annual growth rate (CAGR) of 8% over the last 11 years and adjusted operating profit at 11%. I don’t feel confident that it will achieve that kind of growth over the next 11 years.
This, it would appear, is a consensus view. The share price is low compared to past profit.
| Autotrader | AUTO | Online marketplace for motor vehicles | 14/07/2026 | 6.9/10 |
| How capably has Auto Trader made money? | 3.0 | |||
| Autotrader has grown revenue and profit at about 10% CAGR over the last decade by selling advertising subscriptions to car dealers and additional features to generate, promote, manage, and price listings. As the biggest classified site by far, powerful network effects pull in buyers and dealers. | ||||
| How big are the risks? | 1.0 | |||
| Because Autotrader is the dominant marketplace its growth potential may be limited. Its biggest customers, dealers, have new competitors: direct sales frommanufacturers, and lessors. Big tech could challenge its monopoly directly (e.g. Amazon) or by disintermediating Autotrader. | ||||
| How fair and coherent is its strategy? | 2.0 | |||
| Autotrader’s strategy is to bring more of the deal process online. but the poor reception of Deal Builder shows dealers are questioning whether it adds enough value to justify price increases. This has impacted relations with dealers and employees. The App still scores well. | ||||
| How low (high) is the share price compared to normalised profit? | 0.9 | |||
| Low. A share price of 504p values the enterprise at £4,160 million, about 12 times normalised profit. | ||||
| NB: Bold text indicates factors that reduce the score. Bold and italicised text doubly so. The maximum score is 3 for each criterion except price, which has a maximum of 1 (explained here) | ||||
30 Shares for the future
Here is the ranked list of Decision Engine shares. I review the scores at least once a year, soon after each company has published its annual report. The price scores are calculated using the share price prior to publication.
Generally, I consider shares that score more than 5 out of 10 to be worthy of long-term investment in sizes determined by the ideal holding size (ihs%).
Bloomsbury Publishing (LSE:BMY), Focusrite (LSE:TUNE) and Solid State (LSE:SOLI) have published annual reports and are due to be re-scored.
| 0 | company | description | score | qual | price | ih% |
| 1 | FW Thorpe | Makes lighting systems for commercial, industrial and public settings | 9.9 | 9.0 | 0.9 | 9.9% |
| 2 | James Latham | Distributes imported panel products, timber, and laminates | 8.5 | 7.5 | 1.0 | 7.0% |
| 3 | Hollywood Bowl | Operates tenpin bowling centres | 8.4 | 8.0 | 0.4 | 6.7% |
| 4 | Renew | Maintains and improves road, rail, water, and energy infrastructure | 8.1 | 7.5 | 0.6 | 6.1% |
| 5 | Jet2 | Flies people to holiday locations, often on package tours | 8.0 | 7.0 | 1.0 | 5.9% |
| 6 | Solid State | Manufactures electronic systems and distributes components | 7.8 | 7.0 | 0.8 | 5.5% |
| 7 | Howden Joinery | Supplies kitchens and joinery to builders and online to DIYers | 7.8 | 7.0 | 0.8 | 5.5% |
| 8 | Porvair | Manufactures filters and laboratory equipment | 7.7 | 8.0 | -0.3 | 5.4% |
| 9 | Judges Scientific | Acquires and grows businesses that manufacture scientific instruments | 7.5 | 6.5 | 1.0 | 4.9% |
| 10 | Keystone Law | Operates a network of self-employed lawyers | 7.4 | 7.0 | 0.4 | 4.9% |
| 11 | Anpario | Manufactures natural animal feed additives | 7.3 | 7.0 | 0.3 | 4.7% |
| 12 | Quartix | Supplies vehicle tracking systems to small fleets | 7.3 | 7.0 | 0.3 | 4.5% |
| 13 | Bunzl | Distributes essential everyday items consumed by businesses | 7.2 | 7.0 | 0.2 | 4.5% |
| 14 | Volution | Manufacturer of ventilation products | 7.2 | 8.5 | -1.3 | 4.4% |
| 15 | Oxford Instruments | Makes imaging and semiconductor manufacturing systems | 7.0 | 7.0 | 0.0 | 4.0% |
| 16 | Churchill China | Manufactures tableware for restaurants etc. | 7.0 | 6.0 | 1.0 | 4.0% |
| 17 | Focusrite | Designs recording equipment, synthesisers and sound systems | 7.0 | 6.0 | 1.0 | 4.0% |
| 18 | Cake Box | Cake shop franchise and sweet manufacturer | 7.0 | 7.0 | 0.0 | 4.0% |
| 19 | Autotrader | Online marketplace for motor vehicles | 6.9 | 6.0 | 0.9 | 3.9% |
| 20 | YouGov | Surveys public opinion and conducts market research online | 6.9 | 6.0 | 0.9 | 3.8% |
| 21 | Games Workshop | Designs, makes and distributes Warhammer. Licenses IP | 6.7 | 8.5 | -1.8 | 3.5% |
| 22 | Macfarlane | Distributes and manufactures protective packaging | 6.5 | 5.5 | 1.0 | 3.0% |
| 23 | Cohort | Manufactures/supplies defence tech, training, consultancy | 6.4 | 8.0 | -1.6 | 2.8% |
| 24 | Softcat | Sells software and hardware to businesses and public sector | 6.4 | 7.0 | -0.6 | 2.7% |
| 25 | Goodwin | Casts and machines steel and processes minerals for niche markets | 6.3 | 7.5 | -1.2 | 2.6% |
| 26 | Advanced Medical Solutions | Manufactures surgical adhesives, sutures and dressings | 6.3 | 6.5 | -0.2 | 2.5% |
| 27 | Bloomsbury Publishing | Publishes books and educational resources | 6.2 | 7.5 | -1.3 | 2.5% |
| 28 | Tristel | Manufactures hospital disinfectant | 6.0 | 8.0 | -2.0 | 2.5% |
| 29 | 4Imprint | Customises and distributes promotional goods | 5.8 | 8.0 | -2.2 | 2.5% |
| 30 | Renishaw | Makes tools and systems for manufacturers | 4.7 | 6.5 | -1.8 | 2.5% |
Click on a share's score to see a breakdown (scores may have changed due to movements in share price). Key: qual is the share’s score out of 9 for the three quality factors (capabilities, risks, and strategy), price is the price score from -3 to +1, and ih% is the suggested ideal holding size as a percentage of the total value of a diversified portfolio.
Richard Beddard is a freelance contributor and not a direct employee of interactive investor.
Richard owns many shares in the Decision Engine. He weights his portfolio so it owns bigger holdings in the higher-scoring shares.
For more on the Decision Engine and Share Sleuth, please see Richard’s explainer.
Contact Richard Beddard by email: richard@beddard.net or on Twitter: @RichardBeddard
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.
Disclosure
We use a combination of fundamental and technical analysis in forming our view as to the valuation and prospects of an investment. Where relevant we have set out those particular matters we think are important in the above article, but further detail can be found here.
Please note that our article on this investment should not be considered to be a regular publication.
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