The ARB (ASX:ARB) share price is up 70% in 2020: Is it too late to invest?

The ARB Corporation Limited (ASX:ARB) share price has been on fire in 2020. Is it too late to buy the 4×4 accessories company’s shares?
The post The ARB (ASX:ARB) share price is up 70% in 2020: Is it too late to invest? appeared first on Motley Fool Australia. –

shares higher, growth shares

One of the best performers on the S&P/ASX 200 Index (ASX: XJO) in 2020 has been the ARB Corporation Limited (ASX: ARB) share price.

Since the start of the year, the 4×4 accessories manufacturer’s shares have risen a massive 70%.

Why is the ARB share price rocketing higher in 2020?

Investors have been buying ARB’s shares this year following its positive performance in FY 2020 and its strong start to the new financial year.

In FY 2020, ARB reported a 4.6% increase in total revenue to $467 million and a 0.3% lift in net profit to $57.3 million. This was despite its sales being materially impacted during April and May at the height of the pandemic.

Pleasingly, the company bounced back quickly from this and recently released a strong first quarter update for FY 2021.

ARB has achieved unaudited sales revenue growth of 17.7% for the first quarter. This compares to 5% growth during the first quarter of FY 2020.

Things were even better in respect to its profits, with the company’s profit before tax during the first quarter coming in at $29.7 million.

While no comparison was given for the first quarter of FY 2020, it is almost certainly a significant increase on the prior corresponding period. After all, during the entire first half of the previous financial year, ARB recorded a profit before tax of $34.4 million.

This means the company has already achieved 86% of FY 2020’s first half profit before tax after just one quarter.

And although management advised that there is too much uncertainty for it to provide guidance, it appears confident that a strong first half profit result is coming.

It commented: “While the short to medium term outlook for the Company is positive, the future economic environment remains very uncertain and no guidance can be given for the remainder of the financial year.”

Should you invest?

I think ARB is a quality company, but at 32x estimated FY 2021, I feel its shares are a little on the expensive side now. Especially given the uncertainty around how sustainable its sales growth is at present.

In light of this, I would suggest investors keep their powder dry and wait for a better entry point.

Man who said buy Kogan shares at $3.63 says buy these 3 ASX stocks now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.

Find out the names of our 3 Post COVID Stocks – For FREE!

*Returns as of 6/8/2020

More reading

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ARB Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post The ARB (ASX:ARB) share price is up 70% in 2020: Is it too late to invest? appeared first on Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!