Carsales (ASX:CAR) Share Price Driven Higher By FY20 Outlook

The Carsales.Com Ltd (ASX: CAR) share price went up over 5% in response to the company’s FY20 outlook give at the annual general meeting (AGM).

Carsales was founded in 1997, it’s the largest automotive, motorcycle and marine classifieds business in Australia. It is headquartered in Melbourne and employs more than 1,200 people around the world. The company has operations in the Asia Pacific region and has stakes in businesses in Brazil, South Korea, Malaysia, Indonesia and Thailand.

Carsales.Com AGM

At the start of Carsales’ AGM presentation it reminded investors of its decent FY19 result which included revenue growth of 11% to $418 million, adjusted EBITDA (click here to learn what EBITDA means) growth of 7% to $210 million and adjusted net profit growth of 3% to $131 million.

Carsales.Com management said that the company is assuming a gradual recovery in Australian automotive market conditions across the year, supported by lower interest rates, an improved lending environment, a recovering property sector and recent tax changes.

The company said it has seen a solid start to the year in Q1 in the Core Australia Dealer and Private businesses. In Display the company is anticipating an improving trajectory across FY20, although market conditions remain challenging in this segment.

The underlying performance of its Data business has been “solid” excluding the continued exit of its non-core low margin product and contracts. Management are also expecting the domestic businesses of Tyresales and Redbook Inspect to show good growth in FY20.

In Brazil and South Korea, the online car company is expecting similar growth in FY20 as FY19. The company is not anticipating a further deterioration of the South Korean economy as a result of the ongoing trade dispute with Japan. In Chile the company is expecting higher profit and it’s going to make a similar level of investment in its Mexico and Argentina divisions.

Overall, Carsales said it expects revenue, adjusted EBITDA and adjusted net profit growth to be “solid” in FY20.

Is The Carsales Share Price A Buy?

ASX investors clearly thought so on the release of this update. I thought it sounded positive, although “solid” isn’t very specific about guidance, but perhaps it’s better not to provide exact expectations so investors don’t expect too much or too little.

Carsales is growing at a decent pace, but the businesses revealed in the free report below could be even better ideas.

At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.

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