Online second hand car marketplace Auto Trader (AUTO) is up 2.3% to 411.8p as full year results, reflecting its first year as a public company, reveal a big advance in pre-tax profit.
Revenue is up 10% to £281.6 million in the March 2016 financial year and operating profit increases 27% to £169.6 million. A proposed dividend of 1p per share brings the total dividend for the year to 1.5p.
The company has hit the ground running since its March 2015 IPO with the stock up 75% on its 235p issue price.
In last week’s edition of Shares we drew the comparison with online property portal Rightmove (RMV), noting both companies generate significant growth, are cash generative and have limited capital expenditure requirements, we also correctly flagged the introduction of share buybacks alongside prelims.
The company has signalled its intention to pay out around a third of its earnings once net debt to earnings before interest, tax, depreciation and amortisation falls below two times. This metric hit 2.2 times at the March year end.
Encouragingly management say the new financial year has ‘started well’.
