Taking Panmure Gordon fcast9 May 2016 23:20
From iii on the week ahead ...........
Wednesday 11
Vertu Motors (VTU) released a trading update and executed a placing of 56 million shares in early March, leading Panmure Gordon to upgrade earnings per share guidance by 8% to 6.1p for the year to 29 February - up 20% on 2015.
With its high-margin aftersales business continuing to grow, its acquisitions integrated and outlook for the vehicle market strong in March - typically the strongest month of the year, management is confident the UK's new car market will stabilise at current levels, with the supply push from Europe likely to stay in place.
But earnings for 2017 and 2018 have been downgraded by 10% to 5.9p and 13% to 6.4p respectively.
"On our revised forecasts the shares trade on a price/earnings (PE) ratio of 11.3x (February 2017), and at our 87p target price, would trade on a PE of 14.9x, a very modest premium to the rating of the wider market that we believe to be justified given its rising Return On Capital Employed and 11% order book growth to February 2016," said analyst Michael Donnelly, rating the shares 'buy'.
Look out for our exclusive chat with Vertu Motors on results day.