Car listings website Auto Trader (AUTO) is the top riser on the FTSE following a well-received set of full year results. Earnings for the year to 31 March are slightly ahead of expectations and the shares advance 8.4% to 383.8p.

Significantly, although explicit guidance is not given, some analysts believe average revenue per advertiser (ARPR) could be higher than existing forecasts in the current financial year.

AJ Bell investment director Russ Mould explains that the key number to look at when judging Auto Trader’s performance is ARPR. This spells out how much the business makes every month on average from the car retailers which use its services.

‘In the 12 months to 31 March ARPR was up nearly 10% as its clients took more premium products and ancillary services such as a new dealer finance product,’ says Mould.


In March Auto Trader spooked investors by guiding that used car stock would be down. Clearly this has implications for ARPR.

‘ARPR growth is expected to be more modest in the year ahead as the number of vehicles sold on its website falls – reflecting a weaker new and used car market over the past year,’ Mould adds.

‘This will put a greater onus on the company to bolster returns by cross-selling and upselling services to existing clients.’

As Mould acknowledges, the company has other ways of boosting ARPR – a point we made last month when we said to buy the shares.

Liberum analyst Ian Whittaker comments: ‘The one question will be ARPR growth with an expected decline in stock acting as a headwind but accelerating contribution from product(s) with the dealer finance product starting off very well.’

Investment bank UBS adds: ‘Beat on 2018 operating income and earnings per share, language on 2019 ARPR guidance indicates performance could be ahead of consensus. Only negative is lack of specific ARPR guidance, perhaps indicating uncertainty over level of stock declines.’


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Issue Date: 07 Jun 2018