Eagers Automotive Ltd
Morningstar Rating for Stocks | Fair Value | Economic Moat | Capital Allocation |
---|---|---|---|
A$55.70 | Wnvznm | Qhqsxptd |
We Expect Eagers' Elevated Profitability to Moderate as Vehicle Supply Returns
Business Strategy and Outlook
We forecast that Eagers to continue to capture market share in the highly fragmented auto retailing segment. We estimate Eagers now boasts a market share of about 11%. As the largest dealer in the market, Eagers can centralize back-office operations and fractionalize these fixed costs over a significantly larger volume and revenue base, affording a durable cost advantage over smaller peers. Accordingly, we estimate the company earns gross and net profit margins ahead of smaller competitors. We believe Eagers' extensive size and scale should allow it to deliver midcycle profit before tax margins of about 4%.