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The Autosports (ASX:ASG) share price is up 6%. Here’s why

The car dealer’s share price is revving higher on increased earnings and a new acquisition.
The post The Autosports (ASX:ASG) share price is up 6%. Here’s why appeared first on The Motley Fool Australia. –

The Autosports Group Ltd (ASX: ASG) share price has ramped into fifth gear today after Autosports announced an earnings update and a new acquisition.

At the time of writing, shares in the retail automotive company are up 6.56%, trading at $2.60. For context, the S&P/ASX 200 Index (ASX: XJO) is currently 0.27% lower.

Let’s take a closer look at today’s news.

What did Autosports announce?

Full-year earnings update

In its first statement to the ASX, Autosports advised it was expecting revenue for FY21 to be between $1.92 billion and $1.96 billion, an increase of 13%-15% on FY20. The company expects net profits before tax to be between $68 million and $70 million – an increase of around 200% on FY20.

Autosports says these better-than-expected results are due to 37.5% growth in the car market. Despite some issues around semi-conductor computer chips in cars, supply is as anticipated.

The company said easing of COVID-19 restrictions, especially in Victoria, has seen a recovery in its vehicle servicing and spare parts sales.

John Newell Mazda purchase

In its second statement today, the company announced it will buy an 80% interest in John Newell Mazda, Alexandria. The John Newell dealership is opposite the Autosports Group luxury car dealership in Alexandria, an inner suburb of Sydney.

The purchase will cost Autosports $16 million – comprising $12 million “for goodwill” and $4 million for 80% of the net assets. Autosports expects the purchase to be completed by 1 July 2021. It’s conditional on several factors including a new lease and the “release of encumbrances and vendor securities”.

Autosports share price snapshot

Over the past 12 months,  the Autosports share price has increased 127%. Since the beginning of this year, the value of the company’s shares has risen by almost 79%. Shares reached a record high of $2.77 in February this year.

Autosports Group has a market capitalisation of around $511 million.

The post The Autosports (ASX:ASG) share price is up 6%. Here’s why appeared first on The Motley Fool Australia.

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Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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