- Record first half sales
- Interim dividend up 21%
- On target to achieve full year expectations
After a soggy few days for equity markets automotive retailer Vertu Motors (VTU:AIM) provided some welcome news on Wednesday after delivering record first half revenue and hiking the dividend by 21.4%.
The shares advanced 2% to 71.6p taking gains over the last year to 66%. The stock is approaching eight-year highs.
The company said trading in the key month of September was ‘strong’ reflecting the plate change in new cars. The board anticipates the company will achieve full year profit in line with market expectations.
Consensus analyst forecasts call for revenue to grow 18.5% to £4.7 billion and EPS (earnings per share) growth of 19% to 9.9p according to LSEG data.
Analysts have revised their forecasts up by around 27% over the last 12-months while EPS estimates for 2025 have risen around 25% reflecting strong momentum in the business.
MOTORING AHEAD WITH DIVIDEND HIKE
Revenue jumped 20% to a record £2.4 billion in the six months to 31 July driven by growth in the core group and acquisitions. Adjusted pre-tax profit increased 11.7% to £31.5 million.
The company said new vehicle supply continued to improve while high margin aftersales demand remains ‘robust’. After successfully integrating the Helston acquisition the company said it has identified several ‘quality’ bolt-on opportunities.
Reflecting progress in the first half and strong financial strength management hiked the dividend by 21.4% to 0.85p per shares.
In addition, the company has repurchased 7.7 million shares representing 2.2% of shares capital in issue on 1 March 2023. The company has repurchased 14% of issued shares over the last seven years.
Vertu ended the period with net tangible assets per share of 70.9p reflecting a strong asset base. Net debt excluding leases was £90.7 million compared with £75.4 million at year end.
WHAT ARE THE EXPERTS SAYING?
Liberum has kept 2024 pre-tax profit forecasts unchanged at £47 million but adjusted net debt estimates due to higher interest costs.
‘We maintain our view that Vertu is the highest quality motor retailer amongst its listed peer group and so deserves a rating at least in line with peers, if not higher.’
Liberum notes Vertu’s forward PE (price to earnings) ratio of 6.4 times is below the long-term average of 9.2 and also below the PE multiple at which peer Lookers (LOOK) is set to be taken over.
