CAR share price in focus
Since the 1990s, CAR Group has been an operator of online marketplaces specialising in cars, motorcycles, and other vehicles.
As a marketplace provider, CAR Group aims to streamline the buying and selling process while providing added security and convenience for both parties. The combination of technology and advertising solutions gives both sellers and buyers peace of mind when making a big purchase.
The company has steadily grown over the last few years and now has global reach including in Australia (carsales), South Korea (Encar), the US (Trader Interactive) and Chile (chileautos).
SOL shares
Founded in 1903, Washington H. Soul Pattinson (WHSP) is an investment company with a diversified portfolio spanning various industries and asset classes.
Some of its largest holdings include significant stakes in well-known publicly listed companies such as TPG Telecom (ASX: TPG), New Hope Group (ASX: NHC), and a cross-shareholding in Brickworks (ASX: BKW).
SOL’s goal is to deliver strong returns to its shareholders through capital growth and a consistent increase in dividends as a holding company. As the second-oldest publicly listed company on the ASX, it boasts a long history of capital appreciation and dividend reliability. In fact, it has never missed a dividend payment since its listing in 1903! SOL operates like a family-run LIC, with a focus on the benefit of all shareholders, who are closely aligned with the company’s success.
CAR & SOL share price valuation
As a growth company, one way to put a broad estimate on the CAR share price could be to compare its price-to-sales multiple over time. This can tell us how the company has historically been valued relative to its total revenue.
Currently, CAR Group Limited shares have a price-sales ratio of 8.88x, compared to its 5-year average of 14.28x, meaning its shares are trading lower than their historical average. This could mean that the share price has fallen, or sales have increased, or both. In the case of CAR, revenue has been growing over the last 3 years. Of course, context is important – and this is just one valuation technique. Investment decisions can’t just be based on one metric, but this can be a rough starting point.
Since SOL is more of a ‘blue chip’ company, we could look at its dividend yield to determine its value. If we compare it to the historical dividend yield, we can get a sense of the stability of the company and its ability to pay out income. SOL is paying a trailing dividend yield of around 2.25%, which compares to its 5-year average of 2.44%.
This is just one of many ways you could put a value on SOL shares. The Rask websites offer free online investing courses, created by analysts explaining valuation methods like Discounted Cash Flow (DCF) and Dividend Discount Models (DDM). They even include free valuation spreadsheets which can help you learn how to value a company like CAR or SOL.
