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FY20 profit: Will Eagers (ASX:APE) shares rev higher?

The Eagers Automotive Ltd (ASX: APE) share price will be on watch tomorrow after the car company released revised profit expectations for FY20.

Eagers owns a large network of car dealerships around the country. It has been operating for over 100 years.

FY20 profit

The company gave an update for the 12 months to 31 December 2020, which is the first full year of trading as the enlarged company after acquiring Automotive Holdings Group (AHG).

It said that it’s now expecting to report an underlying operating profit before tax from continuing operations of $209.4 million for 2020. This is up more than double compared to the $100.4 million for the prior corresponding period.

The $209.4 million profit exceeds the profit guidance range given in December 2020, of between $195 million to $205 million for FY20.

Eagers Automotive explained that the improved profit result was delivered by stronger underlying operating profit before tax for both the car and truck retailing businesses.

Summary thoughts

This was another impressive update – beating your own guidance is an attractive result. However, how long will this strong level of demand go on for? I’d be surprised if it continued for the whole of 2021. Car sales aren’t normally this strong.

Looking at other ASX growth shares in the car space, I’d rather buy shares of Bapcor Ltd (ASX: BAP).

Instead of Eagers or Bapcor, I suggest getting a free Rask account and accessing our full stock reports. Click this link to join for free and access our analyst reports.

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