6:29 pm, November 18, 2010
For the UK listed motor retailer stocks, 2010 has started on a much more stable footing than 2009. this time last year we had pendragon valued as a penny stock with significant doubt over the financial stability of a number of the groups as they struggled to meet banking covenants.
The recapitalisation and refinancing efforts made, along with strong trading performance for the sector as a whole, has resulted in significantly stronger balance sheets and banking relationships 12 months on.
In spite of that, the structure of the sector means that it is still open to relatively significant percentage price swings.
The majority of the stocks currently trade at under 50p per share meaning that small movements in the share price produce significant gains and losses. the stock market is also still heavily discounting asset bases and weighting forecast future performance when deriving the share price movements.
The final quarter of 2009 saw significant drops in share values for the listed stocks as analysts balanced the summer optimism resulting from a strong trading performance with fears for the post-scrappage scheme trading environment in 2010.
In the main, share prices have risen during January with hr Owen, pendragon and Vertu all reporting gains of more than 30 per cent on the year to date.
This has been supported by positive trading statements for the final quarter of 2009. But share prices have not returned to their October levels, reflecting underlying concerns over 2010 performance however the current trend is positive.
Lookers and Inchcape have not fared as well during January, with Inchcape dropping by 30 per cent and Lookers returning to the 2009 closing price after a mid-month price rise. caffyns has remained stable, with little trading volume.
The outlook for the next few months depends heavily on retail performance after the end of the scrappage scheme. the snow during January resulted in most businesses forecasting a poor performance for the month. however, the level of undelivered orders is strong. March performance will be pivotal in driving market sentiment as will the recovery pace of the general retail economy.
If you have any questions about the above, please contact me on 0161 493 1930.
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