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Cambria Automobiles – continues “in line”, but value or value trap?

By Steve Moore | Thursday 4 January 2018

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Previously writing on Cambria Automobiles (CAMB) I stated trading “in line”, but can that be continued? Today there’s an announcement of “Franchising developments & AGM trading update”

The former sees the company “delighted to announce that it will also be opening a Lamborghini dealership in Q1 2018” - this to be located in Chelmsford in the same facility as its Bentley dealership - and the latter includes that “the group's trading performance in the first three months of the current financial year has been in line with the board's expectations”.

However, that “in line” is behind the corresponding prior year period both on a total and like-for-like basis. That’s with positive aftersales and used vehicle profitability against a tough sales market – its used vehicle like-for-like unit sales -2.8% and for new vehicles -14.4%.

House broker to the company, N+1 Singer, argues “Cambria has now established one of the most exciting new franchise development pipelines in the premium and high luxury sector… The cal18 P/E of 8.0x (5.4x EV/EBITDA) does not adequately reflect this growth potential”. However, I remain very wary of the company-noted “general uncertainty in the consumer environment and the pressure that vehicle manufacturers are under as a result of the current Sterling exchange rate”.

As such, at the current just over 60p share price, I retain my prior caution here – and currently continue to avoid.

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