Eagers Automotive Ltd

APE: XASX (AUS)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	A$67.20	Mtxky	Sgctlphy

Eagers Automotive Earnings: Order Backlog Underpins Strong Sales and Margins

Angus Hewitt

Aug 25, 2023

We raise our fair value estimate for narrow-moat Eagers Automotive by 7% to AUD 11.80 per share. Underpinning the upgrade are higher calendar 2023 sales and operating margin forecasts for the core car retailing business. The favorable supply/demand imbalance created by vehicle delivery disruptions is easing but slower than we anticipated. We still assume margins moderate in calendar 2024 as conditions normalize and likely cyclical demand headwinds bite—but less sharply than previously expected. Despite the upgrade, shares are overvalued.

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