Lookers increases guidance

Motor dealer Lookers (LON: LOOK) outperformed the UK car market in the third quarter and pre-tax guidance has been increased to no less than £75m.

Last year’s pre-tax profit was £90.7m, but that benefited from government assistance and a strong used vehicle market. However, a lack of available new cars to sell is holding back the performance of all motor dealers.

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The new car market was flat in the third quarter even though it grew by 4.6% in September. Lookers grew volumes by 5.5% in the third quarter. Used vehicle volumes declined by 7.1%. Aftersales revenues are growing.

Net cash was £86m at the end of September 2022. The total dividend is expected to be 3p a share. A £15m share buyback programme has been launched.

The Lookers share price has recovered in recent weeks and it has risen a further 6.1% to 75.3p. That values the shares on five times prospective 2022 earnings. There have been slight upgrades in 2023 figures, but profit is still expected to fall to £57m, increasing the multiple to seven.

The forecast yield is 4% and there is potential for a growing dividend.

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