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Piercing the gloom

Update | Automotive Retailers | 13 Nov 2017

Lookers issued a Q3 trading statement that reaffirmed management expectations for 2017. It also indicated the initiation of a share buyback programme, as in the absence of any immediate M&A opportunities the recent fall in the share price has made the returns compelling from such an allocation of capital. Clearly, new car sales in the UK are persistently lower year-on-year, with confidence declines among consumers and businesses taking their toll. However, the strength of higher-margin used car demand and aftermarket sales continue to deliver a positive mix. Overall, the rating appears undemanding and the yield attractive.


Driving forward

Update | Automotive Retailers | 22 Aug 2017

A strong first half performance saw Lookers deliver yet another record trading period, overcoming the dilutive effect of the sale of the Parts business in H216. The performance of the continuing activities has been enhanced by the reinvestment of the proceeds in the two new dealership groups last year. In addition the balance sheet remains strong, facilitating both organic investment and M&A, despite the uncertainty that persists in the UK car market. Lookers looks set to continue its growth strategy with a sharper brand focus. The improved prospective yield also has attractions.


Strategy for driving growth

Update | Automotive Retailers | 16 Mar 2017

Lookers continued its impressive development in FY16, delivering yet another record performance. The buoyancy of the UK car market combined with the disposal of the parts distribution business enabled management to further its consolidate and build strategy. The addition of Warwick Holdings and Knights North West are further positive developments, with more acquisitions likely during 2017 adding to organic progression.


Still firmly on course

Update | Automotive Retailers | 11 Nov 2016

Lookers’ Q3 trading update confirms trading is on course to meet market expectations. The disposal of the Parts division has completed at GBP 120m, with GBP 82m of the proceeds used for new acquisitions. While market fears have caused a c 40% price drop against 12-month highs for the sector, we think Lookers’ nominal discount to peers on CY16 P/E rating is unjustified given its sound trading record and earnings growth potential.


Plenty of action

Outlook | Automotive Retailers | 31 Aug 2016

In just two weeks, Lookers successively announced the planned £120m disposal of its Parts division, a £55m acquisition, a fine set of interim results and, finally, another £27m acquisition introducing BMW/MINI to the group. All point positively to the future, yet the shares languish at 30% below their 12-month high and at a 45% P/E discount to the retail sector.


Adverse reaction hard to justify

Update | Automotive Retailers | 06 Jul 2016

A weak share price reflects fears about a post-Brexit economy rather than current trading, which remains on course. The challenge may again be formidable, but there are opportunities that a strong management team can use to demonstrate the quality of the group's earnings.


Record profits again

Update | Automotive Retailers | 15 Mar 2016

Lookers has an enviable record; despite new car registrations showing little change over the 12 years since 2003, the group has delivered consistent growth, increasing EPS by 188% from 5.17p in 2003 to 14.88p in 2015. Investment has continued, lifting the future profits potential. We believe that the group's impressive record still has some considerable way to go.


Perfect fit

Update | Automotive Retailers | 07 Sep 2015

The market responded positively to the Benfield Motors acquisition, liftingthe share price by 9% on the day. The natural fit, the enhancement toearnings and the minimal risks related to management synergy all point toan excellent deal for shareholders. The shares remain attractively priced.


Potential undervalued

Outlook | Automotive Retailers | 25 Aug 2015

While Lookers shares have risen by 12% over the past year, we feel the current rating still fails to recognise the future potential. Interim results prompted a rise in market estimates, which given the order book, could well be extended following the group's autumn IMS. Standing at a c 28% discount to the FTSE All-Share retailers index, we feel that the market fails to recognise the industry dynamics being exploited by management.


Beating the market

Update | Automotive Retailers | 02 Jul 2015

Lookers' forthcoming interim figures should again show that the group is outperforming its market, and we estimate pre-tax profit will rise by at least 5%. We believe share prices in the motor segment of the retail market fail to recognise the quality of earnings. Its shares are attractively priced.


Daily comment

Institutional Comment | Automotive Retailers | 16 Mar 2015



Another impressive year

Update | Automotive Retailers | 12 Mar 2015

Lookers has experienced another impressive year. Underlying pre-tax profits of £65m are up by 35% over the previous year and almost double the record £34m earned in 2011. While the trading climate has become more challenging in recent months, Lookers has the management and strategy to continue outperforming its sector.