AutoCanada (TSX:ACQ) - Share price, News & Analysis

Q: What is the Fair Price of ACQ when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

ACQ (CA$27.45) is trading below our estimate of [[fair value]] (CA$82.01)

ACQ fundamental analysis
Snowflake Score
Valuation	5/6
Future Growth	4/6
Past Performance	2/6
Financial Health	2/6
Dividends	0/6

ACQ Stock Overview

AutoCanada Inc., through its subsidiaries, operates franchised automobile dealerships.

Rewards

Trading at 66.5% below our estimate of its fair value

Earnings are forecast to grow 32.66% per year

Earnings have grown 36.6% per year over the past 5 years

Risk Analysis

Debt is not well covered by operating cash flow

AutoCanada Competitors

Diversified Royalty

TSX:DIV

CA$346.8m

Sleep Country Canada Holdings

TSX:ZZZ

CA$1.1b

BMTC Group

TSX:GBT

CA$515.0m

Leon's Furniture

TSX:LNF

CA$1.2b

Price History & Performance

Summary of all time highs, changes and price drops for AutoCanada
Historical stock prices
Current Share Price	CA$27.45
52 Week High	CA$58.76
52 Week Low	CA$22.41
Beta	2.7
1 Month Change	7.14%
3 Month Change	-3.92%
1 Year Change	-53.39%
3 Year Change	199.67%
5 Year Change	24.72%
Change since IPO	161.43%

Shareholder Returns

	ACQ	CA Specialty Retail	CA Market
7D	-1.4%	5.5%	3.0%
1Y	-53.4%	-12.9%	0.7%

Return vs Industry: ACQ underperformed the Canadian Specialty Retail industry which returned -11.1% over the past year.

Return vs Market: ACQ underperformed the Canadian Market which returned -0.2% over the past year.

Price Volatility

Is ACQ's price volatile compared to industry and market?
ACQ volatility
ACQ Average Weekly Movement	5.5%
Specialty Retail Industry Average Movement	6.6%
Market Average Movement	10.6%
10% most volatile stocks in CA Market	19.0%
10% least volatile stocks in CA Market	4.3%

Stable Share Price: ACQ is less volatile than 75% of Canadian stocks over the past 3 months, typically moving +/- 6% a week.

Volatility Over Time: ACQ's weekly volatility (6%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
2009	2,550	n/a	https://www.autocan.ca

AutoCanada Inc., through its subsidiaries, operates franchised automobile dealerships. The company offers a range of automotive products and services, including new and used vehicles, vehicle leasing, vehicle parts, vehicle maintenance and collision repair services, extended service contracts, and vehicle protection and other after-market products. It also arranges financing and insurance for vehicle purchases by its customers through third-party finance and insurance sources.

AutoCanada Fundamentals Summary

How do AutoCanada's earnings and revenue compare to its market cap?
ACQ fundamental statistics
Market Cap	CA$725.11m
Earnings (TTM)	CA$147.49m
Revenue (TTM)	CA$5.43b

4.9x

P/E Ratio

0.1x

P/S Ratio

Is ACQ overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
ACQ income statement (TTM)
Revenue	CA$5.43b
Cost of Revenue	CA$4.45b
Gross Profit	CA$983.93m
Other Expenses	CA$836.44m
Earnings	CA$147.49m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	5.58
Gross Margin	18.12%
Net Profit Margin	2.72%
Debt/Equity Ratio	344.2%

How did ACQ perform over the long term?

See historical performance and comparison

We’ve recently updated our valuation analysis.

Valuation

Is ACQ undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for ACQ?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for ACQ. This is calculated by dividing ACQ's market cap by their current preferred multiple.
What is ACQ's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	CA$725.11m

ACQ key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	0.5x
Enterprise Value/EBITDA	9.2x
PEG Ratio	0.2x

Price to Earnings Ratio vs Peers

How does ACQ's PE Ratio compare to its peers?

ACQ PE Ratio vs Peers

The above table shows the PE ratio for ACQ vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	9.3x
DIV Diversified Royalty	13.6x	n/a	CA$346.8m
ZZZ Sleep Country Canada Holdings	10.4x	8.6%	CA$1.1b
GBT BMTC Group	7.1x	n/a	CA$515.0m
LNF Leon's Furniture	6.2x	n/a	CA$1.2b
ACQ AutoCanada	4.9x	32.7%	CA$725.1m

Price-To-Earnings vs Peers: ACQ is good value based on its Price-To-Earnings Ratio (4.9x) compared to the peer average (9.3x).

Price to Earnings Ratio vs Industry

How does ACQ's PE Ratio compare vs other companies in the North American Specialty Retail Industry?

Price-To-Earnings vs Industry: ACQ is good value based on its Price-To-Earnings Ratio (4.9x) compared to the Canadian Specialty Retail industry average (7.2x)

Price to Earnings Ratio vs Fair Ratio

What is ACQ's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

ACQ PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	4.9x
Fair PE Ratio	22.4x

Price-To-Earnings vs Fair Ratio: ACQ is good value based on its Price-To-Earnings Ratio (4.9x) compared to the estimated Fair Price-To-Earnings Ratio (22.4x).

Share Price vs Fair Value

What is the Fair Price of ACQ when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: ACQ (CA$27.45) is trading below our estimate of fair value (CA$82.01)

Significantly Below Fair Value: ACQ is trading below fair value by more than 20%.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price, but analysts are not within a statistically confident range of agreement.

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Future Growth

How is AutoCanada forecast to perform in the next 1 to 3 years based on estimates from 9 analysts?

Future Growth Score

4/6

Future Growth Score 4/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

32.6%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: ACQ's forecast earnings growth (32.7% per year) is above the savings rate (1.6%).

Earnings vs Market: ACQ's earnings (32.7% per year) are forecast to grow faster than the Canadian market (8% per year).

High Growth Earnings: ACQ's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: ACQ's revenue (4.1% per year) is forecast to grow slower than the Canadian market (6.4% per year).

High Growth Revenue: ACQ's revenue (4.1% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: ACQ's Return on Equity is forecast to be very high in 3 years time (40%).

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Past Performance

How has AutoCanada performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

36.6%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: ACQ has high quality earnings.

Growing Profit Margin: ACQ's current net profit margins (2.7%) are lower than last year (2.8%).

Past Earnings Growth Analysis

Earnings Trend: ACQ's earnings have grown significantly by 36.6% per year over the past 5 years.

Accelerating Growth: ACQ's earnings growth over the past year (27.4%) is below its 5-year average (36.6% per year).

Earnings vs Industry: ACQ earnings growth over the past year (27.4%) underperformed the Specialty Retail industry 27.4%.

Return on Equity

High ROE: Whilst ACQ's Return on Equity (36.75%) is high, this metric is skewed due to their high level of debt.

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Financial Health

How is AutoCanada's financial position?

Financial Health Score

2/6

Financial Health Score 2/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: ACQ's short term assets (CA$1.3B) do not cover its short term liabilities (CA$1.4B).

Long Term Liabilities: ACQ's short term assets (CA$1.3B) exceed its long term liabilities (CA$850.9M).

Debt to Equity History and Analysis

Debt Level: ACQ's net debt to equity ratio (324.5%) is considered high.

Reducing Debt: ACQ's debt to equity ratio has increased from 187.7% to 344.2% over the past 5 years.

Debt Coverage: ACQ's debt is not well covered by operating cash flow (6.8%).

Interest Coverage: ACQ's interest payments on its debt are well covered by EBIT (4.4x coverage).

Balance Sheet

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Dividend

What is AutoCanada current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

Dividend Yield vs Market

Notable Dividend: Unable to evaluate ACQ's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate ACQ's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.

Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if ACQ's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if ACQ's dividend payments have been increasing.

Earnings Payout to Shareholders

Earnings Coverage: ACQ is not paying a notable dividend for the Canadian market.

Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as ACQ has not reported any payouts.

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

1.7yrs

Average management tenure

CEO

AutoCanada has no CEO, or we have no data on them.

Leadership Team

Experienced Management: ACQ's management team is not considered experienced ( 1.7 years average tenure), which suggests a new team.

Board Members

Experienced Board: ACQ's board of directors are considered experienced (4 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/08/13 00:00
End of Day Share Price	2022/08/12 00:00
Earnings	2022/06/30
Annual Earnings	2021/12/31