In fact, half year underlying pre-tax profits of £4.6m were a thumping 18 per cent ahead of the expectations of analyst Matthew McEachran at joint house broker N+1 Singer, and 10 per cent higher than Mike Allen at Zeus Capital had predicted. The outcome was also 40 per cent up on the same period in the prior financial year. Moreover, with the company reporting strong trading in the key registration plate change month of March which came after the February half year end, analysts at both broking houses have upgraded their full-year earnings estimates by around 5 per cent.
Zeus Capital now expects pre-tax profits in the 12 months to end August 2016 to rise by 35 per cent to £10.4m based on a 17 per cent hike in revenues to £618m to produce EPS of 8.2p and underpin a 12 per cent increase in the payout to 0.9p a share. N+1 Singer has similar forecasts. On this basis, the shares are priced on less than 10 times earnings estimates and offer a 1.1 per cent prospective dividend yield. Those estimates imply second half pre-tax profits of £5.8m which looks a pretty solid forecast considering Cambria posted £4.4m of second half profit last financial year, and the company will benefit from some smart looking earnings accretive acquisitions this time round as well as a strong tailwind in both used and new car sales. Indeed, profit per unit on used car sales rose by almost 10 per cent in the latest six month trading period and the rolling 12-monthly return on investment, as defined by the gross profit as a proportion of average stock levels, has shot up to an industry leading return of 148 per cent. Tight working capital management, and low stock turn rates, also mitigate risk from any weakness in used car prices.