Car Group (CAR:ASX)

Last update - 12 February 2024 By James Woods

Car Group (CAR) is a current holding within the ASX Growth portfolio, and this morning has announced its latest 1H earnings report, with the latest report showing a 34% increase in profits and reiterated its current outlook.

Car Group reported a strong finish for the six months ending in December with the company reporting an adjusted net income of A$162.7 million, surpassing the average analyst forecast of A$121.8 million, while revenue rose by 60% to A$530.7 million.

The decision to raise the interim dividend to $0.345, up from $0.285 a year earlier, reflects the company’s financial health and positive outlook. CAR’s optimism extends into 2024, anticipating strong revenue and earnings growth, bolstered by double-digit growth in its Australian private, dealer, and media segments, as well as significant gains in North America, Brazil, and Asia.

The company’s performance is particularly notable in Brazil, where Car Group increased its stake in the Webmotors vehicle marketplace to 70% from 30%, with revenue and earnings rising by 26% and 29%. Car Group also reported strong performance in North America, showing impressive revenue and earnings growth with revenue and earnings rising by 15% and 18%, respectively. This global expansion strategy also saw revenue and earnings in Asia increase by 13% and 11%.

Shares in Car Group rose 51% in 2023 and are up a further 7.5% in 2024. On the back of the earnings report Car Group is down 1.45% after initially opening up as much as 3.3%, likely as investors take profits given the context of the recent strength in the share prices. Current analysts remain bullish on Car Group ahead of the interim results announcement, although some analysts have issued caution that the stock is starting to look overvalued.

As a reminder, CAR’s inclusion in the ASX Growth portfolio is based on the momentum component of the portfolio and its inclusion will depend on how the stock trades between now and the next rebalance date of February 15th, 2024.

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