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Why the National Tyre (ASX:NTD) share price rocketed 21% today

A drawing of a white rocket streaking up, indicating a surging share pirce movement
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The National Tyre & Wheel Ltd (ASX: NTD) share price has surged more than 21% this morning after another trading update from the Aussie motor vehicle group.

At the time of writing, National Tyre shares are trading at $1.04.

Why is the National Tyre share price climbing?

The National Tyre share price has rocketed higher at the open following a 2.4% gain in yesterday’s trade. Today’s big news was National Tyre providing updated guidance for the financial year ended 30 June 2021 (FY2021).

National Tyre reported that trading in Q3 had “continued recent trends”. As a result, it expects to record operating earnings before interest, tax, depreciation and amortisation (EBITDA) of between $31 million and $33 million in FY2021. That figure excludes items relating to the August 2020 Tyres4U acquisition and AASB16 adjustments.

This comes after a strong trading update in January that saw the company’s share price rocket higher. In that announcement, the company said first-half trading had “exceeded expectations”.

Per this morning’s release, the company is now estimating basic earnings per share (EPS) of 17 cents. That represents a significant payout against yesterday’s $0.85 closing National Tyre share price.

National Tyre also provided an update on its financial position. The company said its balance sheet remained strong with $24.8 million of cash on hand at 31 March 2021. The group’s net debt sits at $19.3 million as at quarter-end.

Today’s guidance assumes no material impact on operations from a market downturn or withdrawal of the JobKeeper program.

Foolish takeaway

Shares in the Aussie motor vehicle services group are surging higher in early trade. Today’s update is just one of many good performance updates from National Tyre over the past 12 months.

The National Tyre share price has rocketed 226.9% higher in the last year. That comes amid a hot used car market in part due to strong economic stimulus measures and reduced consumer spending options due to the coronavirus pandemic.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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