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Eagers Automotive Ltd APE

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Morningstar’s Analysis

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Near-Term Margins Look Good for Eagers Automotive as Manufacturer Supply Struggles Persist

Angus Hewitt, CFA Equity Analyst

Analyst Note

| Angus Hewitt, CFA |

We raise our fair value estimate for shares in Eagers Automotive to AUD 11.00, from AUD 10.50 previously, due in roughly equal parts to increased near-term earnings assumptions and impacts from time value of money. Low inventory of new vehicles arising from the chip shortage continues to yield excellent pricing power for dealers such as Eagers. As inventory cannot be easily replaced right now, there is little incentive for auto retailers to discount. We raise our calendar 2021 and 2022 NPAT forecasts by 11% to AUD 270 million and AUD 244 million, respectively, on the back of improved margin assumptions.

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Company Profile

Business Description

Eagers Automotive is the largest automotive retailing group in the Australian market, with an estimated share of around 11% of new vehicle sales. The company offers a range of products and services, including the sale of new and used vehicles, vehicle repair services, and parts, among others. The company also facilitates vehicle financing through third-party providers. Additionally, Eagers operates a truck retailing business, offering a similar range of products and services.

5 Edmund Street, Fortitude Valley, P.O. Box 199
Brisbane, QLD, 4006, Australia
T +61 736087100
Sector Consumer Cyclical
Industry Auto & Truck Dealerships
Most Recent Earnings
Fiscal Year End Dec 31, 2021
Stock Type
Employees 7,000