Report: Slow Sales Aside, Auto Groups Outperform Market

Written by:
Kerrigan Advisors
July 12, 2019

CarMax registered its highest all-time stock price in June, leading the nation’s publicly traded dealer groups to a collective year-over-year improvement of 10.4%.

IRVINE, Calif. — The Kerrigan Index registered at 564.25 in June, a 10.4% year-over-year increase and 31.2% year-to-date improvement. Buy/sell firm Kerrigan Advisors publishes the index, which tracks the stock prices for the publicly traded AutoNation, Asbury, CarMax, Group 1, Lithia, Penske, and Sonic dealership groups.

The improvement was driven largely by CarMax, which posted its all-time highest stock price, as well as 52-week highs for Asbury and Group 1. Despite a nationwide decline in new light-vehicle sales, the Kerrigan Index far outperformed the S&P 500 Index, which improved by 6.9% in June and 17.3% year-to-date.

“Some analysts are predicting a stronger second half given the launch of new and redesigned light trucks, as well as a possible interest rate cut from the Federal Reserve,” the report states, in part.

“Strong consumer confidence, steady economic growth and employment gains, and relatively low gasoline prices continue to support new light-vehicle demand, though analysts have noted that affordability is increasingly weighing on the market.”

The firm’s founder and managing director, Erin Kerrigan, noted that, unlike other industries, auto retail benefits from the push and pull of new- vs. used-vehicle sales.

“We’re seeing that these companies continue to perform, their earnings are strong, and a lot of that is driven by the diversified business model that auto retail is so fortunate, frankly, to have,” Kerrigan told CBT News. We have not only new-car sales that we rely on, but also used-car sales, and used-car sales have been tremendously strong.”

To access the full report, click here.

About Kerrigan Advisors

Kerrigan Advisors is the premier sell-side advisor and thought partner to auto dealers nationwide. The firm advises the industry's leading dealership groups, enhancing value through the lifecycle of growing, operating and, when the time is right, selling their businesses. Kerrigan Advisors has represented some of auto retail's largest transactions and advised more of the largest dealership groups in the US than any other buy/sell firm in the industry. Led by a team of veteran industry experts with backgrounds in investment banking, private equity, accounting, finance and real estate, the firm does not take listings, rather they develop a customized approach for each client to achieve their personal and financial goals. In addition to Kerrigan Advisors' sell-side advisory and capital raising services, the firm also provides a suite of consulting services including growth strategy, market valuation assessments, capital allocation, transactional due diligence, open point proposals, operational improvement and real estate due diligence.

Kerrigan Advisors monitors conditions in the buy/sell market and publishes an in-depth analysis each quarter in The Blue Sky Report®, which includes Kerrigan Advisors' signature blue sky charts, multiples, and analysis for each franchise in the luxury and non-luxury segments.—To download a preview of the report, click here.—The firm also releases monthly The Kerrigan Index™ composed of the seven publicly traded auto retail companies with operations focused on the US market. The Kerrigan Auto Retail Index is designed to track dealership valuation trends, while also providing key insights into factors influencing auto retail.—To access The Kerrigan Index™, click here.—To read the—2023 Kerrigan OEM Survey, click here.—Kerrigan Advisors also is the co-author of NADA's Guide to Buying and Selling a Dealership.

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