Publicly traded new and used car dealership market data - June 2015

Earnings releases1

  • All of the major publicly traded auto dealership companies have released their quarterly earnings. As shown in the chart below, the earnings per share (EPS) for six of the eight companies exceeded analyst consensus estimates for their respective most recent quarter.
  • According to Oppenheimer equity research, in May 2015, annualized new light vehicle sales increased 6.3 percent from 16.7 million units to 17.7 million units, as measured by the Seasonally Adjusted Annual Rate (SAAR). CarMax (KMX) continues to outperform the Manheim Used Vehicle Value Index (MUVVI) in terms of average selling price, which has been in a four month decline.2
  • According to Morgan Stanley equity research, a rise in average transaction price of new cars has had a stabilizing effect on used car prices,3 contributing to CarMax’s positive performance throughout the most recent fiscal year.4
Percentage increase/decrease from consensus analyst estimates
  • While annual revenue and EBIT growth has been a positive for most of the publicly traded car dealerships in the most recent twelve-month period, EBIT margins have remained relatively flat.
EBIT margin
Most recent twelve-month period growth
  • For the most recent twelve-month period, all of the publicly traded companies have experienced growth in revenue and all but one experienced growth in EBIT.
  • Sonic Automotive (SAH) has underperformed over the last twelve months (LTM), as indicated by its decline in EBIT and decrease from consensus analyst estimates. Goldman Sachs equity research suggests that weaker sales revenue along with economic conditions contributed to Sonic’s underperformance. In the most recent quarter, used vehicle revenue increased 6.5 percent vs. a Goldman Sachs estimate of 10.9 percent.5

Transactions

  • As reported by S&P Capital IQ, there have been 89 transactions within the US New and Used Motor Vehicle Dealer industry over the last twelve months.
  • On June 8, 2015, Holman Automotive Group, Inc. announced its acquisition of Tri-County Audi, Inc. (Audi Willow Grove), which is based in Willow Grove, Pennsylvania.

Competitor observations

  • CarMax opened 10 stores in fiscal 2013, 13 stores in fiscal 2014, and 13 stores in fiscal 2015. CarMax plans to open between 13 and 16 new stores in each of the next three fiscal years. Specifically, CarMax opened a store in Sicklerville, New Jersey in April 2015.6
  • DriveTime Automotive Group, Inc. (DriveTime) recently entered the market in the Greater Philadelphia area. DriveTime opened a location in New Castle, Delaware in December 2014, Williamstown, New Jersey in February 2015, and Langhorne, Pennsylvania location in June 2015.  
  • According to S&P Capital IQ, DriveTime’s revenue totaled approximately $1.5 billion in the LTM ended March 31, 2014 and EBIT totaled $92.7 million during the same period.

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1Capital IQ and Baker Tilly Capital research, June 2015
2Report as of June 5, 2015
3Report as of June 8, 2015
4Report as of June 8, 2015
5Report as of April 15, 2015
6CarMax 10-K filing for the fiscal year ended February 28, 2015

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