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Why Cambria's strong showing was overshadowed

Cambria had a strong year, but there's doubt that the good times can keep rolling
November 22, 2016

Shares in motor retailer Cambria Automobiles (CAMB) plunged 8 per cent following the group's full-year results. Looking at the reported period's numbers, that takes some explaining. Sales rose across all three divisions, as did gross profits, and overall underlying cash profits rose by more than a quarter to £13.1m. But, despite a strong September, management revealed that the first quarter of the new financial year has been tougher for new car sales, prompting analysts at N+1 Singer to cut pre-tax profit forecasts for the next two financial years by 15 per cent each. The brokerage now expects pre-tax profits of £10.4m for the year ending August 2017, giving EPS of 8.2p, compared with £10.6m and 8.3p in FY2016.

IC TIP: Hold at 64p

Chief executive Mark Lavery said widespread concerns about the new car market "might be over-egged", but he believes it's "only fair to point out the uncertainty". But he also said market jitters could provide those motor retailers still on the acquisition trail with near-term opportunities as transaction prices could soften. Similarly, it's important to remember that 72 per cent of Cambria's gross profits come from its used car and aftersales divisions.

 

CAMBRIA AUTOMOBILES (CAMB)
ORD PRICE:64pMARKET VALUE:£64m
TOUCH:62-65p12-MONTH HIGH:89pLOW: 57p
DIVIDEND YIELD:1.4%PE RATIO:7
NET ASSET VALUE:42p*NET CASH:£0.4m

Year to 31 AugTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20123532.72.30.30
20133964.03.50.50
20144505.34.20.60
20155247.76.00.75
201661411.89.30.90
% change+17+54+54+20

Ex-div: 29 Dec

Payment: 20 Jan

*Includes intangible assets of £21.4m, or 21p a share