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Motorpoint marks better first half

The used car dealer's half-year results were regarded as a return to form
November 30, 2017

Motorpoint (MOTR) – a motor retailer specialising in 'nearly new' vehicles – released a far better set of half-year results compared with this time last year, enough to push the shares 5 per cent higher on the day. Revenues during the first half rose by nearly a fifth thanks to a similar rise in repeat business, while a 64 per cent rise in adjusted pre-tax profits to £10.5m was consistent with analysts' expectations. In the words of broker Numis, the numbers reflected “a convincing return to form” after the group reported a disappointing first-half performance this time last year. Bosses were forced to slash prices in the wake of the Brexit vote and the subsequent fall in the value of sterling.

IC TIP: Hold at 177p

As for the current health of the car market, chief executive officer Mark Carpenter said he hadn’t witnessed any severe drop-off in demand. In his view, there’s still sufficient headroom between the falling average price of a new car and the average residual value of the used vehicle such as Motorpoint sells. This was illustrated by a close to 90-basis point improvement in the gross margin to 7.9 per cent.

Analysts at Numis expect pre-tax profits of £20.6m for the year ending March 2018, giving EPS of 16.7p, compared with £15.7m and 12.6p in FY2017.

MOTORPOINT (MTR)   
ORD PRICE:177pMARKET VALUE:£178m
TOUCH:175-181p12-MONTH HIGH:185pLOW: 121p
DIVIDEND YIELD:2.7%PE RATIO:12
NET ASSET VALUE:20pNET CASH:£21.4m
Half-year to 30 SepTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20164092.41.31.33
20174839.77.82.00
% change+18+304+498+50
Ex-div:1 Feb   
Payment:16 Mar