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.

Company Website

Financial Calendar

Recent Broker notes

BarChart Indicators

Recent Market news

AutoTrader Fundamentals (AUTO)

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Deutsche Bank Hold 302.63 303.50 300.00 300.00 Reiterates

Good little company this one, with little direct competition. The only problem I can see is that they may struggle to expand without going into Europe or USA, which may be their intention having raised cash from the float. I think the European market is more more tricky as it seems, from my limited experience, much more fragmented. Maybe acquisition is on the cards as a way of getting a foothold. I note 'acquisitions & alliances' is a tick box on their website, but with no data yet.

I agree Harry - on my list for consideration!

Final Results

Financial highlights

· Revenue up 8% to £255.9 million (2014: £237.7 million)
· Retailer revenue increased by 9% to £202.1 million (2014: £186.0 million)
· Adjusted underlying EBITDA1 up 15% to £156.6 million (2014: £136.1 million)
· Adjusted underlying EBITDA margin2 increased by 4% pts to 61% (2014: 57%)
· Operating profit 35% higher at £133.1 million (2014: £98.7 million)
· Net external debt3 at year end of £527.9 million (2014: £977.8 million), representing a reduction in leverage4 to 3.4x (2014: 7.2x)

Operational highlights

· Retailer forecourts up 2.5% to 13,452 (2014: 13,129)
· Average Revenue Per Retailer forecourt (ARPR) per month up 6% to £1,252 (2014: £1,181)
· Full Page Ad Views5 (FPAVs) per month increased by 7% to 226.2 million (2014: 212.2 million)
· Completion of UK rationalisation into two office locations in Manchester and London
· Listed on London Stock Exchange in March 2015

Numis Buy 307.13 349.00 370.00 Retains

Barclays Capital Equal weight 315.70 315.70 - 315.00 Initiates/Starts

Canaccord note today:
"We view the recent share price weakness as a buying opportunity. We think Auto Trader will remain relatively resilient if the autos market weakens, as a market leading online classified business model with clearly identified growth drivers and strong cost discipline. We initiate coverage with a BUY recommendation and a 395p price target, offering 25% potential upside from the current share price.
Auto Trader is the UK's leading automotive classified website. Its traffic (47.9m average monthly visits) and listings (437,000 each day) are significantly higher than competitors', helped by strong brand awareness and consumer trust. Around 80% of all used cars sold through the motor trade appear on the site and its access to data and suite of products make it a valuable partner to retailers, providing a lucrative source of leads in a competitive market. The company has demonstrated a long history of growing revenues, and we think it has the tools to extend its track record through up-selling, cross-selling, increasing stock and targeted price increases as it delivers greater value to its partners.
FY16 results released in June were impressive. Leverage has been substantially cut since IPO, reducing the group's interest burden from 36% of sales in FY15 to a forecast 3.5% in FY17. Costs are being leveraged and operating margins growing, with over 90% of incremental revenues expected to drop through to EBITDA in the next three years. Both initiatives are facilitating a significant increase in free cash flow generation for equity holders, which rose over 140% last year. With no need for excess cash the group is using it to pay dividends (yielding 1.6% in FY17E), fund a rolling share buy-back scheme (worth 2.9% of the current market cap this year) and further reduce gearing. We anticipate shareholder returns of nearly £120m in FY17.
We think concerns over Brexit are weighing heavily on the rating - while the chance of a weaker autos market cannot be discounted the UK is coming from a place of strength. Employment has never been higher, consumers are feeling wealthier and finance is available at historically low costs. In addition, the strength and flexibility of the AUTO model, which is reliant on the less volatile used car market, together with ongoing buybacks and tight cost control should, according to our sensitivity analysis, result in continued earnings growth even in a weaker environment.
Auto Trader shares many similarities with Rightmove (LSE : RMV : 3,360p | Hold, 4100p) - it is the market leader in its space, adopts a similar capital return policy, and trades on similar multiples. Our target price of 395p is based on 19.2x calendar 2017 EV/EBITDA - a 15% discount to Rightmove's one-year average EV/EBITDA multiple given the latter's more established track record and heightened macro risk post-Brexit. Quest® provides strong support to our valuation. The recent share price weakness has, in our view, created an opportunity to acquire a quality investment at an attractive entry point."

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