Key facts

With over 4m unique visits each month, Auto Trader is by far the UK’s biggest digital automotive marketplace. We connect buyers and sellers though innovative digital tools and services, across desktop and mobile platforms. Auto Trader is a 100% digital business, ideally placed to lead the digital future of the UK automotive industry.

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AutoTrader Fundamentals (AUTO)

Panmure comment today:
"Auto Trader is a high quality business that enjoys a dominant market position. We believe that the company is well positioned to perform against a weakening macroeconomic backdrop considering its ability to pass on regular price increases to retailers and given that it will benefit from the continued transition of the vehicle buying process online and the growing need for automotive retailers to gather data. The stock justifies a premium rating given its defensibility and cash generation; we therefore initiate coverage with a BUY recommendation and a price target of 417p.
 A strong UK car market. The UK car market has gone through a period of unprecedented growth. Strong new car sales should flow through into the used car market, increasing the number of vehicles listed on the Auto Trader platform.
 An ability to outperform the underlying market. Little correlation exists between Auto Trader’s revenue growth and the number of new car transactions in the UK. This demonstrates Auto Traders ability to maintain and improve the average monthly revenue generated per retailer forecourt (ARPR) throughout the market cycle.
 A dominant market position. Auto Trader has a dominant market position and enjoys leadership across consumer audience, stock volume and site visitor engagement. The aggregator business model can be one of the most powerful and defensible models to operate online, thus Auto Trader should be capable of maintaining its market leading position.
 Increased cash returns. Whilst Auto trader’s current yield isn’t particularly attractive, we see scope for the payout ratio to increase as debt is paid down. Net debt to EBITDA is expected to fall to 1.3x through FY17 (from 3.3x in FY15) which would allow the company to increase the payout ratio from c30% to 50%. In these circumstances, dividend per share could increase from 4.8p to 7.2p and the yield from c1.5% to c2.3%.
 Trading at a discount to its fundamental worth. Our cash flow analysis shows Auto Trader’s intrinsic worth to be c£4.5bn; this equates to a value of 417p per share. This implies that the shares are currently trading at a circa 30% discount to their fundamental worth."

Black Rock reduce https://www.moneyam.com/action/news://www.moneyam.com/action/news

Half year report https://www.moneyam.com/action/news/showArticle?id=6198966

08 Nov 2018 Liberum Capital Buy 460.60 480.00 Reiterates

08 Nov 2018 Shore Capital Hold 460.60 Reiterates

02 Nov 2018 Peel Hunt Add 460.60 510.00 Reiterates

01 Nov 2018 Shore Capital Hold 460.60 Reiterates

31 Oct 2018 UBS Buy 460.60 445.00 Upgrades

Update on joint venture https://www.moneyam.com/action/news/showArticle?id=6214592

Black Rock increase https://www.moneyam.com/action/news/showArticle?id=6257570

Completion of joint venture https://www.moneyam.com/action/news/showArticle?id=6261142

Black rock up stake https://www.moneyam.com/action/news/showArticle?id=6277186

Black Rock reduce https://www.moneyam.com/action/news/showArticle?id=6311505