We undertook the unenviable task of reading the proxy for every company under coverage (and one we don’t cover: TSLA).
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Using Return on Invested Capital as a lens, we take a look at which companies and sub-industries capture the highest returns within the automotive value chain. We calculate ROIC across 27 companies within industries including dealers, OEMs, parts suppliers, aftermarket retailers, and service providers.
This morning (04/24/18), ABG reported Q1 2018 results. New and used unit comps were -2% and +1%, respectively. Total Revenue growth of 4% beat consensus/Wolfe estimates of 2%. Both new and used same-store $GP/Unit were down (-4.5% and -6%, respectively), leading total front end yield down 2%. EPS of $1.93 beat consensus of $1.77 and our $1.81. Shares were up +3% on the day (vs. S&P 500 down 1%).
Most of you cover 50 – 200 stocks and therefore don’t have the liberty of being as into the weeds on every name – that’s our job. To help you do yours, we have created a comprehensive, but chart-heavy, guide to our coverage that is meant to have shelf life and that can be referred back to when you are ready to dig more into our coverage.
The tax overhaul is adding a lot of complexity to fundamentals as investors and companies we speak with struggle to digest consensus expectations and current valuation metrics. We sifted through both Factset and Bloomberg estimates to calculate a bottoms-up consensus of ONLY analysts that have revised estimates on tax reform.
In our first tax reform note we studied numerous angles on tax reform. As a continuation, we are studying additional angles and also adjusting numbers and price targets (Exhibit 1). While we remain concerned of the long-term risk/reward of tax reform, near-term we expect consensus EPS revisions to occur as the rewards are easier to forecast than the risks.
After years of inflating asset prices via credit let’s unwind QE, raise interest rates, meddle in regional wars, reduce homeownership incentives, rush a radical tax overhaul including reducing corporate taxes, rebalance personal taxes, and expanding the fiscal deficit, all during a period of trough unemployment. Let’s just throw all of the economic models out, nothing can go wrong here, I’m psyched let’s go shoot some birds
CEO changes are often viewed as an investment catalyst for strategic change or as a risk to the status quo. We went back and tracked 85 CEO changes across Consumer Retail and Automotive companies looking to better understand stock performance before, after, and during these CEO changes. We show our full database in Exhibit 9,10 & 11.
This morning (10/24/17) ABG reported Q3 2017 results. New and Used Unit comps were -5.5% and -3.0%, respectively. Total Revenue growth of -4.3% missed consensus of flat and our 0.5%. New and Used SSS $GP/Unit were both down significantly at -8.2% and -6.7%; however, F&I per unit was up +10.1%. EPS of $1.48 (un-adjusted for ~$0.15 of one-time items) missed Cons. of $1.55 but beat our $1.46. Shares were up 2% on the day.
Our thoughts go out to those suffering from the devastating effects of Hurricane Harvey. We’ve attempted the unenviable task of assessing the implications of mass destruction to personal property including vehicles on our coverage universe.
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