Why this $1.5 billion ASX 200 stock just surged 10%

ASX 200 investors are sending the stock surging on Tuesday. But why?

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S&P/ASX 200 Index (ASX: XJO) stock GUD Holdings Ltd (ASX: GUD) is off to the races on Tuesday.

Shares in the diversified automotive market products company closed yesterday trading for $9.77. At the time of writing in late morning trade today, shares are changing hands for $10.71 apiece, up 9.6%.

For some context, the ASX 200 is down 0.2% at this same time.

Here's what's piquing investor interest.

ASX 200 stock soars on confirmed earnings guidance

Investors are bidding up the GUD Holdings share price after the company confirmed that its full 2024 financial year (FY 2024) underlying earnings before interest, taxes and amortisation (EBITA) is forecast to be at least $193.5 million.

That's in line with management's prior expectations, and based on updated April 2024 unaudited, management estimates.

Excluding its AutoPacific Group (APG) segment, the ASX 200 stock's automotive was reported to be continuing to trade well across all its key business units.

Management said this reflects the ongoing execution of its diversification strategy and the resilience of the aftermarket. They added that the end user workshop demand also remains positive.

As for APG, the company now expects this business, which it acquired in November 2021, to deliver approximately $63 million in underlying EBITA for the full financial year. That's $3 million below what was expected when GUD reported on its half-year results (H1 FY 2024).

The ASX 200 stock cited various headwinds impacting APG's earnings.

Among those is the New Zealand market's slower-than-expected recovery. The New Zealand market was reported to be operating "marginally above breakeven to date" in FY 2024. However, the NZ business has delivered some $10 million less in EBITA in FY 2024 to date than management's base case assumptions.

APG was also impacted by lower Toyota volumes, with second-half volumes declining, along with "emerging consumer-related softness in the trailering market".

Despite that weak caravan market, management said earnings from Cruisemaster are in line with FY 2023, "reflecting market share gains".

Looking ahead, the company expects revenue and EBITA growth from APG in FY 2025 "as headwinds partially moderate and new business wins begin to contribute".

GUD Holdings' corporate costs, cash conversion and leverage were also said to be tracking in line with management's expectations.

As for passive income

The ASX 200 stock is also popular among passive income investors for its long-term track record of paying two fully franked dividends per year.

GUD Holdings paid a final dividend of 22 cents per share on 14 September and an interim dividend of 18.5 cents per share on 8 March.

That works out to a full-year payout of 40.5 cents per share.

At the current share price of $10.71, this ASX 200 stock trades on a fully franked trailing yield of 3.8%.

The GUD Holdings share price is up 16% over 12 months.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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 Scott Phillips.

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