On Thursday, Goldman Sachs (NYSE:GS) adjusted the price target for Auto Trader Group PLC (AUTO:LN) (OTC: ATDRY) shares, raising it to GBP9.13 from the previous GBP8.70, while reiterating a Buy rating for the company's stock. The adjustment follows the release of Auto Trader's financial results for the fiscal year 2024.
The company reported group revenues that surpassed Goldman Sachs' estimates (GSe) and the company-compiled consensus by 2% and 3%, respectively. Additionally, the reported group EBIT (earnings before interest and taxes) was 4% higher than both Goldman Sachs' expectations and the consensus.
Auto Trader also provided a positive forecast for fiscal year 2025, indicating an expected average revenue per advertiser (ARPA) growth of 8%-10%. This projection aligns with the pre-results expectations of Goldman Sachs and consensus, which were at 9% and 10%, respectively.
Furthermore, the forecast anticipates a marginal decline in retailer forecourt numbers, which is more favorable than the pre-results estimate of a 1% year-over-year decrease anticipated by Goldman Sachs and consensus.
Goldman Sachs noted that the margin guidance of 69% for Auto Trader's core business, which accounts for the impact of Digital Services Tax (DST), had been anticipated by the market. Excluding the DST, the margin is expected to be around 71%. These figures reflect the company's solid performance and its strategic outlook moving forward.
In other recent news, Auto Trader Group PLC has reported impressive financial results for the fiscal year 2024. Notably, the company's group revenue experienced a 14% increase, reaching £570.9 million, surpassing Deutsche Bank (ETR:DBKGn)'s projection of £558.3 million and the consensus estimate of £556.5 million. The adjusted EBITDA also exceeded expectations, coming in at £375.3 million.
Operational profit, after factoring in deferred payment and acquired intangible amortisation, stood at £348.7 million, outperforming both Deutsche Bank's estimate and the consensus figure. Furthermore, Auto Trader's adjusted diluted earnings per share (EPS) was 29.8p, higher than Deutsche Bank's expectation of 28,9p.
In response to these robust results, Deutsche Bank has raised the price target for Auto Trader shares from £9.10 to £9.49, while maintaining a Buy rating. In addition to this, Auto Trader has returned £250.3 million to its shareholders over the year, comprising £169.9 million through buybacks and £80.4 million in dividends.
These significant developments highlight Auto Trader's strong performance and operational efficiency during the fiscal year. Despite challenges in the new car market, the company's strategic advances, such as the development of products to enable direct sales on its platform, have bolstered its market position.
InvestingPro Insights
Building on the analysis by Goldman Sachs, recent data from InvestingPro underscores the financial health and market sentiment around Auto Trader Group PLC (ATDRY). The company's dedication to shareholder returns is evident as it has raised its dividend for 4 consecutive years and has maintained dividend payments for 9 consecutive years, showcasing a strong commitment to consistent shareholder value.
InvestingPro Data highlights a robust revenue growth of 14.13% over the last twelve months as of Q1 2023, with an even more impressive quarterly revenue growth of 15.97% in Q1 2023. These figures confirm the positive outlook presented by Auto Trader. Additionally, the company's operating income margin stands at a healthy 60.59%, indicating efficient management and a strong grasp on operational costs.
Yet, investors should note the high Price/Earnings (P/E) ratio of 29.35 and the Price/Book (P/B) ratio of 13.44, which suggest a premium valuation that may warrant caution for value-focused investors. Furthermore, with the stock trading near its 52-week high and at 98.5% of this peak, the market is showing confidence in Auto Trader's prospects.
For those looking to delve deeper into Auto Trader's performance and future potential, InvestingPro offers additional insights and analytics. Readers can explore more InvestingPro Tips to make informed decisions, and by using the coupon code PRONEWS24, they can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With a total of 14 additional InvestingPro Tips available, investors have a wealth of information at their fingertips to guide their investment strategies.
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