Investors hit the brakes on Lookers (LOOK) despite a strong set of half year results from the car retailer.
Shares have fallen 6.3% to 109p this morning, contrary to N+1 Singer's prediction that they would rise today. Investors picking up on the company's warning that it is approaching the second half of the year with 'some caution'.
The broker, which has a 'buy' rating on the stock, says today's results show outperformance in all areas of the business.
Lookers says revenue climbed 5% to £2.5bn in the six months to June 30, while operating profit from continuing operations climbed 13% to £58.1m.
The firm has reduced its net debt to £61.9m from £74.1m at the end of 2016, despite having invested in its website and in improving dealership facilities. The fall in debt follows a number of acquisitions in the second half of 2016 and the sale of the group's parts division in November.
N+1 Singer says it is upbeat about the future prospects for the business and thinks 'the valuation is unduly low'. Numis adds: 'We back [the stock] based on its track record, predictable growth outlook in used and aftersales, scope for further accretive acquisitions, liquidity and returns profile.'
Chief executive Andy Bruce says the business has made good progress in getting the right brands in the right locations, and the firm's order book for the key September month is forecast to be 'at a historically high level'.
Shareholders will receive an interim dividend of 1.41p a share, some 10% ahead of last year.
