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CAR Group Ltd CAR

Morningstar Rating
A$35.00 +0.56 (1.63%)
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Company Report

Car Group: Revisiting the Company’s Brazil Business Following Seek’s Exit From the Region

We raise our fair value estimate for narrow-moat Car Group by 4% to AUD 27 per share following a review of its Brazil business, Webmotors. Our review was prompted by the recent announcement by narrow-moat Seek to exit Brazil and Mexico, following more than a decade of unsuccessful attempts to enter the market. We had expected Seek to be unsuccessful in the region, while we expected and continue to expect Car Group to be successful there due to differences in network effect dynamics. Following our review, we are upgrading our revenue growth and margin expansion assumptions for Car Group’s Latin American segment. At current prices, Car Group’s shares continue to screen as materially overvalued.

Price vs Fair Value

CAR is trading at a 160% premium.
Price
A$34.44
Fair Value
A$48.00
Uncertainty
Medium
1-Star Price
A$76.35
5-Star Price
A$41.30
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Car Group's online marketplace for Australian automotive, www.carsales.com.au, has established itself as the undisputed leading online marketplace for automotive, supported by networks effects and cost advantages.

Bears

Car Group's recent investments in overseas online marketplaces have been done at arguably expensive multiples.

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Trading Information

Previous Close Price
A$34.44
Day Range
A$34.7335.09
52-Week Range
A$23.4237.00
Bid/Ask
A$35.00 / A$35.02
Market Cap
A$13.20 Bil
Volume/Avg
123,624 / 810,753

Key Statistics

Price/Earnings (Normalized)
40.63
Price/Sales
12.97
Dividend Yield (Trailing)
1.95%
Dividend Yield (Forward)
2.00%
Total Yield
1.95%

Company Profile

Car Group is a technology company operating in the motor vehicles sector. Car Group’s primary business is its Australian online marketplace for automotive, www.carsales.com.au. It is the dominant online automotive marketplace in Australia, at around nine times total time spent compared with its nearest competitor. Car Group also owns and operates businesses in various geographic, category and product adjacencies, including online marketplaces for automotive in South Korea and Latin America, nonautomotive online marketplaces in Australia and the United States, and data and replacement parts businesses.
Sector
Communication Services
Industry
Internet Content & Information
Stock Style Box
Large Growth
Total Number of Employees

Competitors

Valuation

Metric
CAR
SEK
REA
Price/Earnings (Normalized)
40.6332.8182.37
Price/Book Value
4.372.8617.41
Price/Sales
12.976.2417.04
Price/Cash Flow
39.2623.4047.66
Price/Earnings
CAR
SEK
REA

Financial Strength

Metric
CAR
SEK
REA
Quick Ratio
1.710.891.81
Current Ratio
1.730.912.28
Interest Coverage
6.222.6319.81
Quick Ratio
CAR
SEK
REA

Profitability

Metric
CAR
SEK
REA
Return on Assets (Normalized)
6,306.37%4.27%13.85%
Return on Equity (Normalized)
9,929.03%8.23%24.91%
Return on Invested Capital (Normalized)
6,778.90%6.60%19.23%
Return on Assets
CAR
SEK
REA
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