Carsales.Com is under Algo Engine sell conditions following the lower high formation at $13.50.
Earnings guidance provided by Carsales for FY19 are for EBITDA of $210mn and NPAT of A$131mn. Revenue guidance was a little weak, indicating full year profits are being supported by cost out initiatives.
We will review CAR on the price retracement & Algo Engine buy signal.
CAR Reported 1H EPSg of 5%, is the current 22x P/E sustainable?
Assuming an acceleration from 5% EPS growth to 10% EPS (big ask) in the next 12 months it will place CAR on a 3.5% yield. We’ve seen other high PE stocks negatively rerate such as TPG and I think some caution and close watching of the earnings trend in CAR is required.
Global tech players such as eBay, gumtree, facebook etc are becoming more active in CAR’s business space. This may be part of the reason EPS growth is dropping off.