Really good interim results from Vertu Motors today.
It looks like they are successfully grabbing market share from larger rivals.
Gearing is modest, cash flow great. You don't giet a dividend at the moment but surley rivals will have to cut theirs
Decent commentary at www.investorschampion.com with peer group comparison

Interesting note from Edison:
edisoninvestmentresearch- Vertu Update 19 - 10 - 2015

Year end Revenue
Year - (£m) PBT*(£m) EPS*(p) DPS(p) P/E(x) Yield(%)
02/14 -- 1,684.5 - 17.5 - 4.64 - 0.80 - 15.1 - 1.1
02/15 -- 2,074.9 - 22.0 - 5.06 - 1.05 - 13.8 - 1.5
02/16e - 2,350.0 - 25.4 - 5.82 - 1.35 - 12.0 - 1.9
02/17e - 2,500.0 - 27.5 - 6.29 - 1.50 - 11.1 - 2.1

A flurry of trades during the last 30 minutes mostly "AT" got the stock moving till the end with a large "UT" @ 72.25p at over the offer price 72p

16:35:03
72.25p
58,545K UT

reason for the spike:
There was a 70.50p intraday high during the last 3 weeks on moving over that point the spike took hold and that was what cause a "breakout "

Tipped in the IC last 7 September
IC 2015/09/07/comment/simon-thompson/poised-for-a-strong-rally
-----------------
A report on day of results 14th October

Cash-rich Vertu Motors shrugs off VW scandal
By Harriet Mann | Wed, 14th October 2015 - 13:09

Vertu record profit
With a strong consolidation strategy and more expensive cars in its showrooms, car dealer Vertu Motors (VTU) has just reported record interim profit growth and its eighth consecutive half-year increase in like-for-like used car sales. Even the unfortunate timing of its VW dealership acquisition is paying off, so far.

Just ten days after the Volkswagen diesel emissions scandal blew up, Vertu said it had paid £12.8 million for VW and Audi dealerships, with a further £1.5 million deferred. Although it's early days, management has not seen any significant decline in the operations.

"I'm interested in making shareholder value in the long-term and I'm not going to let short-term stuff get in the way, if I am honest," chief executive Robert Forrester told Interactive Investor. "But it's a great acquisition for us and it is a very high-performing business."

Vertu's 119 car dealerships, which now include more premium brands like Jaguar and Audi, generated revenue of £1.2 billion in the six months ended 31 August, up 14%. That dropped through to pre-tax profit of £16.4 million, up 28% and a new record, giving earnings per share of 3.82p. Strip out amortisation of intangible assets, and profit hit £17 million.

Vertu Motors VW scandal

And over 80,000 people are now paying for Vertu's higher margin service plans every month, with customers locked in for three years. Revenue here jumped by 6.2% jump to £93.8 million, but margins are significantly higher than elsewhere in the business – gross margin is 44% versus 7.3% for the new car retail division. After an "absolute stellar performance" in the group's largest profits-maker, the aftersales division now represents 8% of group sales.

Another core part of the business, used cars are the group's second largest profits contributor, generating £42 million in the period. "Our business does well when we are good at used cars," said Forrester.

'Grow or die'

The group hasn't turned its back on volume dealerships, either, adding VW brand Skoda and France's Renault forecourts to its portfolio. With the mantra "grow or die" and the capacity for further consolidation, Forrester is keeping his eyes peeled for further consolidation opportunities. With no debt and over £32 million cash in the bank, the boss knows what he wants.

"I got an information memorandum at 20:02, and by 20:06 I had turned it down. We haven't got time to mess about with things, if it's not for us then we don't do it," he said.

Cash generated from operations more-than doubled to £37.6 million in the six months, which has allowed management to raise January's interim dividend by 29% to 0.45p per share. Every Friday night management get a written report on each aspect of cash management - in their own words they are "on it like a rash".

"We put a lot of effort into working capital management and a lot of things went right for us," explained Forrester. "On a £2.4 billion business, our cash flows fluctuate wildly, but in this period it was good. If we make profit we like to turn it into cash, it's very important."

The group's fleet division is the least cash generative aspect of the business, new cars is "pretty good" - as payment is made before collection - and, although the group's £70 million worth of used car stock absorbs a lot of cash, aftersales has an industry-leading 115% return on investment. The services business is also good for working capital as it receives cash in advance from the 80,000 customers paying monthly for the service.

"It's complicated and it varies across the streams, but we just have to manage it tightly," Forrester explains.

Things are looking good for the sixth-largest car dealership for the rest of the year.

"The outlook is pretty positive and the UK economy continues to grow. So as long as we have a positive economy we will be in a good place. But actually aftersales is very defensive, so even if car sales dip you can still grow aftersales for five years because it is very slow in its build-up.

Vertu currently trades on about 12.5 times forward earnings, although that includes over 9p of cash per share. Strip it out and the ratio drops to an inexpensive 10.8 times.

BREAKOUT
72.75p +0.50p

My comments somewhere else...

Today 13:21
the bounce is on from the large sells this morning taking advantage of yesterday's large rise
offer @ 71.25p at the moment but looks like is going to go to 72p very soon by the look of it
Today 14:24
going going gone, now 72p is now the new offer and with time looks ready to go also.
so we could be for a higher Breakout today
Today 15:01
The early 72p trades at offer are gone........ but they have added another 15K, it seems they have them on the bolt waiting, wonder if there is many more to add, cuz they are being taking as "AT" on small trades every so often
Today 15:19
72p offer gone now we could have another spike like yesterday, just need a MM to be taken and 74p here we come
Today 15:41
Is not 4pm yet and 74p offer being reached, now to go over that will be more difficult today as there is plenty of MMs and trades at this price, but by the pace of today trading one never knows.
We are on a BREAKOUT position ( there was an intraday of 73.75p last month, about a month now ) at this points the share price can run very fast.

74p +1.74p
And despite the lower offer at the end the UT ( closing price ) was @ 74p with a large trade

16:35:24
74.00p
59,946 UT

The expects tell you ........ never trade before 9am a share that is on the order book system.
the reason is during that time the spread is very large, so waiting til then is a good omen.
It was after 9am that VTU started warming up today and still is on this process but the bid and offer are already higher than yesterday's close, so up on the day

LEARNING HOW THE MARKET WORKS

U trade or Uncrossing Trade. What it is

What really happens at 4.30 when the market closes is the "closing auction" ( if there are any potential trades left on the book), anyone at this point with Direct Market Access including joe public can enter their bids/offers for the stock, from here lets call them buys and sells, its easier.

The participants have 5 minutes to enter what price they will pay for or be prepared to sell their stock for at this point, no-one is trading here, just entering. Furthermore, their entries have to be within 5% of the last AT trade of the day.

After 5 mins and all the entries are in, the SETS computer swings into action, and what it does is calculate from the entries the HIGHEST VOLUME trades that can be made, the MOST shares it can UNCROSS from one side of the book to the other. It is literally "matching" any trade that will trade at the prices on the book, if you see what I mean? This little exercise takes up to 30 secs above the 5 min auction.

The resultant figure becomes the UT ( uncrossing Trade) for the day and the official days closing MID price

So the UT you see every evening at something like 16.35.+30secs is NOT a BUY, is NOT a SELL.. but half and half, it is a Volume figure

Today 11:55 - I am out for the moment being, yesterday excitement is gone
short term the TA Indicators have gone well overbought
time will come for another go

Perfect timing?
that has being my strength for some time now.
Some people say... Buy low ... Sell high
I just done that in the space of 4 working days

sold VTU bought GBO

Vertu Motors PLC (VTU:LSE) set a new 52-week high during today's trading session when it reached 76.00. Over this period, the share price is up 27.1%.

May be of interest Stan

Yes D/C, thanks again and another cracking chart.

ST of IC today - So with upgrades likely, I still reckon that Vertu's shares offer value, so much so that I have tweaked my target price range to 85p to 90p. Trading on 11.3 times forecast earnings pre-upgrades, and offering a 2.1 per cent prospective dividend yield, I continue to rate Vertu Motors' shares a buy on a bid-offer spread of 75.5p to 76p.

68.38p atm down almost 8%.
2517

Vertu Motors acquires three Honda dealerships
StockMarketWire.com
Vertu has acquired the trade and assets of three Honda dealerships in Nottingham, Derby and Stockton-On-Tees from Lookers for a total consideration of approximately GBP2m.

ST of IC today - On a bid-offer spread of 71p to 71.75p, and offering decent upside to my fair value target range of 85p to 90p, I see a short-term trading buy opportunity here.

KEEP an EYE

VTU 61.375p ( 61.25 / 61.50p )

Has come down a long way and now below last month placing @ 62.50p to make acquisitions. Results next month, should show further improvement on results as the car market is growing fast. "Trading ahead of expectations with record revenues and profits". Low PE

note - The UK’s new car market grew by 5.3% in March.

There is a seller at the moment on the order book @ 61.50p, is shows on the trades as "AT", twice has been added on 10K size once was taken as "AT".

buys are now taking place at this low prices, and the order book get stronger on the bid side and price 61.25p

so far has found a bottom at 60.25p, but the order book is still very balance since earlier weakness and the seller is still around being very persistent on the order book

Vertu Motors - Research from Simply Wall st Automotive Retail
Company description
Vertu Motor plc operates as an automotive retailer in the United Kingdom. More info.

Value

Vertu Motors's value based on future cash flows and its price relative to the stock market.

Value is all about what a company is worth versus what price it is available for. If you went into a grocery store and all the bananas were on sale at half price, they could be considered undervalued.

VALUE BASED ON FUTURE CASH FLOWS

The estimated value of Vertu Motors shares based on future cash flows discounted to their present value. Learn more.

Here we compare the current share price of Vertu Motors to its discounted cash flow value.

The discounted cash flow value is simply looking at what the company is worth today, based on estimates of how much money it is expected to make in the future.
Current Discount

Amount off the current price Vertu Motors is available for.
Intrinsic value
25%
Share price is £0.63 vs Future cash flow value of £0.84
Current Discount Checks

For Vertu Motors to be considered undervalued it must be available for at least 20% below the current price. Less than 40% is even better.
Vertu Motors's share price is below the future cash flow value, and at a significant discount (> 20%).
Vertu Motors's share price is below the future cash flow value, but not at a substantial discount (< 40%).

PRICE RELATIVE TO MARKET

The relative price of Vertu Motors shares compared to stock market averages.

We can also value a company based on what the stock market is willing to pay for it. This is similar to the price of fruit (e.g. Mangoes or Avacados) increasing when they are out of season, or how much your home is worth.

The amount the stock market is willing to pay for Vertu Motors's earnings, growth and assets is considered below, and whether this is a fair price.

Price based on past earnings

Are Vertu Motors's earnings available for a low price, and how does this compare to other companies in the same industry?
Good value based on earnings compared to the Retailing industry average.
Good value based on earnings compared to the overall market.

Price based on expected Growth

Does Vertu Motors's expected growth come at a high price?
Information is not available.

Price based on value of assets

What value do investors place on Vertu Motors's assets?
Good value based on assets compared to the Retailing industry average.
Show me more potentially undervalued companies in the Specialty Retail industry
X
Value checks

We assess Vertu Motors's value by looking at:
Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) (Click here or on bar chart for details of DCF calculation.)

Is the PE ratio less than the market average, and/ or less than the Retailing industry average (and greater than 0)? (2 checks)

Is the PEG ratio within a reasonable range (0 to 1)? (1 check)

Is the PB ratio less than the Retailing industry average (and greater than 0)? (1 check)
Vertu Motors has a total score of 4/6, see the detailed checks below.

Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.
Note 2: PEG ratio is based on analysts EPS growth expectations in 1 year (0%).

Full details on the Value part of the Simply Wall St company analysis model.
X
Discounted cash flow (Free cash flow to Equity)

The calculations below outline how a value for Vertu Motors is arrived at by discounting future cash flows to their present value.

In this approach analyst's estimates of Levered Free Cash Flows are used to obtain the Equity Value.

If no analyst estimate is present the free cash flows are forecast from the last known value using the normalised growth rate in revenue over the past 5 years. This growth rate is capped at 20% in the first year and reduces going forward by 1% per year.

You can read more about discounted cash flow (DCF) here.

A 2 stage model is used which includes 5 years of growth followed by perpetual stable growth. All values in GBP Millions unless otherwise stated.

5 year cash flow forecast
2016 2017 2018 2019 2020
Levered FCF (GBP, Millions) £22.70 £-1.90 £14.60 £22.40 £25.40
Source Analyst x1 Analyst x1 Analyst x1 Analyst x1 Analyst x1
Present Value
Discounted (@ 8.4%) £20.94 £-1.62 £11.47 £16.23 £16.98
Present value of next 5 years cash flows:
£64

Terminal Value
Terminal Value = FCF2020 × (1 + g) ÷ (Discount Rate – g)

Terminal Value = £25 × (1 + 1.9%) ÷ (8.38% – 1.9%)

Terminal value based on the Perpetuity Method where growth (g) = 1.9%:
£400

Present value of terminal value:
£268

Equity Value
Equity Value (Total value) = Present value of next 5 years cash flows + terminal value

Value = Total value / Shares Outstanding (£332 / 396)

Value per share:
£0.84

Current discount (share price of £0.63): 25%

Estimate of Discount Rate
The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.

Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)

Discount rate = 8.38% = 1.92% + (0.8 * 8.08%)

Estimate of Bottom Up Beta
The Levered Beta is the Unlevered Beta adjusted for financial leverage. It is limited to 0.8 to 2.0 (practical range for a stable firm).

Levered Beta = Unlevered beta (1 + (1- tax rate) (Debt/Equity))

0.516 = 0.505 (1 + (1- 21%) (2.78%))

Levered Beta used in calculation = 0.8

Assumptions
The risk free rate of 1.92% is from the 10 year government bond rate in United Kingdom.
The bottom-up beta is estimated by analysing other companies in the same industry.

The Equity Risk Premium is calculated by subtracting the risk free rate from the market return premium (10%) (source: Buffet).
The dividend discount model is automatically used for companies in the following industries: Banks, Insurance, Real Estate Investment Trusts (REITs), Diversified Financial Services and Capital Markets.

Future Performance

Vertu Motors's expected performance in the next 1 to 3 years, based on estimates from 5 analyst(s).

The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.

Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
Insufficient estimate data, unable to calculate 1 year growth expectation.

Past and Future Earnings per Share

The accuracy of the analysts who estimate the future performance data can be gauged below. We look back 3 years and see if they were any good at predicting what actually occurred. We also show the highest and lowest estimates looking forward to see if there is a wide range.

Analysts growth expectations

2 year growth check

Super high growth metrics x1.5?
Which of the these is expected to increase by over 50% in 2 year's time?

Revenue
Cash flow
Profit

Performance in 3 years

In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
No 3 year Return on Equity data available.

Improvement & Relative to industry

No 3 year Return on Equity data available.
No 3 year Return on Equity data available.

Future performance checks

We assess Vertu Motors's future performance by looking at:

Is the growth in earnings expected to beat the low risk savings rate, plus a premium to keep pace with inflation, in 1 year and 3 years? (2 checks)
Does the average analyst expect Revenue to increase by 50% or more in 2 years? (1 check)
Does the average analyst expect Operating Cash Flow to increase by 50% or more in 2 years? (1 check)
Does the average analyst expect Net Income (Profit) to increase by 50% or more in 2 years? (1 check)

Is the Return on Equity in 3 years expected to be over 20%? (1 check)
Some of the above checks will fail if the company is expected to be loss making in the relevant year.
Vertu Motors has a total score of 0/6, see the detailed checks below.

Note: If no +3 year data is available, +2.5 year data may be used.

Note 2: We use GAAP per Share in all our calculations.

Full details on the Future part of the Simply Wall St company analysis model.

Past Performance

Vertu Motors's performance over the past 5 years.

The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.

Past earnings growth

Below we compare Vertu Motors's growth in the last year to its industry (Retailing).

Earnings growth analysis

We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
Vertu Motors's earnings growth has exceeded the industry average over the past year.
Vertu Motors's 1 year earnings growth exceeds its 5 year annual average (21.6% vs 20.1%).
Vertu Motors has delivered strong earnings growth in the past 5 years.

Profit History

Vertu Motors's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.

Performance last year

We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
Poor return on shareholders funds (ROE) last year.
Vertu Motors performed worse than the Retailing industry average based on return on assets (ROA) last year.
Performance based on revenue producing assets (ROCE) is broadly the same over 3 years.

Past performance checks

We assess Vertu Motors's performance over the past 5 years by checking for:
Has earnings per share (EPS) increased in past 5 years? (1 check)
Has the EPS growth in the last year exceeded that of the Retailing industry? (1 check)

Is the current EPS growth higher than the average annual growth over the past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent earnings report. Some checks require at least 3 or 5 years worth of data.
Vertu Motors has a total score of 4/6, see the detailed checks below.

Note: We use GAAP Earnings per Share in all our calculations.

Health

Vertu Motors's financial health and their level of debt.

A company's financal position is much like your own financial position, it includes everything you own (assets) and owe (liabilities).

The boxes below represent the relative size of what makes up Vertu Motors's finances.

The net worth of a company is the difference between its assets and liabilities.

Net Worth

Vertu Motors short term (1 year) commitments are greater than its holdings of cash and other short term assets.
Vertu Motors's cash and other short term assets cover its long term commitments.
Balance sheet

This treemap shows a more detailed breakdown of Vertu Motors's finances. If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
Assets

Liabilities and shares

The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
High level of stock/ inventory/ unsold assets.
Company has no debt.

Historical Debt

Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.

The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.

If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
The level of debt (4%) compared to net worth is satisfactory (less than 40%).
The level of debt compared to net worth has been reduced over the past 5 years (14% vs 4% today).
Total debt is well covered by annual operating cash flow (greater than 20% of total debt).
Interest on debt is well covered by earnings (17x coverage).
Financial health checks

We assess Vertu Motors's financial health by checking for:
Are short term assets greater than short term liabilities? (1 check)
Are short term assets greater than long term liabilities? (1 check)
Has the debt to equity ratio increased in the past 5 years? (1 check)
Is the debt to equity ratio over 40%? (1 check)
Is the debt covered by short term assets? (1 check)
Are earnings greater than 5x the interest on debt (if company pays interest at all)? (1 check)
Vertu Motors has a total score of 5/6, see the detailed checks below.


Full details on the Health part of the Simply Wall St company analysis model.

Income

Vertu Motors's current dividend yield, its volatility and sustainability.

Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
Annual Dividend Income

Dividend payments
1.64%
Current annual income from Vertu Motors dividends. Estimated to be 3.02% next year.
If you bought £2,000 of Vertu Motors shares you are expected to receive £33 in your first year as a dividend.
Dividend Amount

Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account? It is up there with the best dividend paying companies?
Paying below low risk savings rate. (2.15%)
Paying below the markets top dividend payers. (4.65%)

Historical dividend yield

It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.

We also check to see if the dividend has increased in the past 5 years.
Dividends per share have been stable in the past 5 years.
Dividends per share have increased over the past 5 years.

Current Payout to shareholders

What portion of Vertu Motors's earnings are paid to the shareholders as a dividend.
Dividends paid are well covered by net profit (5.6x coverage).

Future Payout to shareholders

Dividends after 3 years are expected to be well covered by net profit (3.6x coverage).
Income/ dividend checks

We assess Vertu Motors's dividend by checking for:
Firstly is the company paying a notable dividend (greater than 0.5%) - if not then the rest of the checks are ignored.
Current dividend yield, is there one at all, is it higher than the low risk savings rate, and is it above the top 25% of dividend payers? (2 checks)
Has the dividend been volatile in the past 5 years (drop of more than 25%)? (1 check)
Has the dividend increased in the past 5 years? (1 check)
How sustainable is the dividend, can Vertu Motors afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
Vertu Motors has a total score of 4/6, see the detailed checks below.


Vertu Motors's CEO's compensation, management and board of directors tenure and insider trading.

Management is one of the most important areas of a company. We look at unreasonable CEO compensation, how long the team and board of directors have been around for and insider trading.

CEO

Robert Forrester, image provided by Google.
Robert Forrester
COMPENSATION £519,000
AGE 46
CEO Bio

Mr. Robert Forrester serves as the Chief Executive Officer of Vertu Motors Plc. Mr. Forrester serves as Vice President of Automotive Fellowship International. He served as the Managing Director of Reg Vardy PLC from June 1, 2005 to the sale of the business to Pendragon plc in 2006 and served as its Finance Director since 2001. He has been an Executive Director of Vertu Motors Plc since December 20, 2006. Mr. Forrester served as an Executive Director of Reg Vardy Plc from 2001 to February 15, 2006. He is a Member of the Economic Affairs Committee of the Confederation of British Industry and the Investment Committee of St Hugh's College, Oxford. Mr. Forrester qualified as a Chartered Accountant with Arthur Andersen.

CEO Compensation
CEO's compensation has been consistent with company performance over the past year.
CEO's compensation appears reasonable.
Management Team

Robert Forrester

TITLE
Chief Executive Officer
COMPENSATION
£519,000
AGE
46
Michael Sherwin

TITLE
Chief Financial Officer

COMPENSATION
£395,000
AGE
57
David Crane

TITLE
Chief Operations Officer and Member of Operations Board
Nicola Loose

TITLE
General Counsel and Member of Operations Board
Steve Ferry

TITLE
Group Sales Director and Member of Operations Board
Liz Cope

TITLE
Chief Marketing Officer
Board of Directors Tenure

Average tenure of the Vertu Motors board of directors:

Board tenure
5.5 years
The tenure for the Vertu Motors board of directors is about average.