Eagers Automotive Ltd (ASX: APE) shares have risen a staggering 165.96% in the last year.
The company is the largest automotive retailing group in the Australian market.
Its core business involves the ownership and operation of motor vehicle dealerships covering a diversified portfolio of automotive brands. Its range of products and services includes the sale of new and used vehicles, vehicle repair services, and parts, among others.
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Why have Eagers Automotive shares skyrocketed?
The company saw its share price rise on the back of strong core operations, strategic acquisitions, and growing demand for electric vehicles, particularly from Chinese automaker BYD.
In its latest half-year results, it reported an 18.9% lift in revenue to $6.5 billion. The company also delivered a record operating profit of $197.7 million, up 8.3% on the prior corresponding period.
Eagers also strengthened its market position, with its share of new vehicle sales rising to 13.8%, compared to 11.1% in the same period last year.
Looking ahead, management is forecasting $13 billion in full-year revenue.
What does Bell Potter project?
After such a sharp rise in the last year, investors may be wondering if there are more gains ahead, or if they have missed the boat.
Bell Potter released a report on Eagers Automotive shares at the end of August. The report included upgraded underlying operating profit before tax (PBT) forecasts in 2025, 2026 and 2027 by 5%, 10% and 14%.
The upgrades have been by both revenue upgrades of 7%, 8% and 9% and increases in our margin estimates in 2026 and 2027. We now forecast a $1,875m uplift in 2025 revenue to $13.1bn and underlying operating PBT of $426m which equates to a margin of 3.26%.
The broker also increased its price target by 37% to $24.00.
We have rolled forward our PE ratio and EV/EBITDA valuations by a year given we are now in 2H2025 and apply multiples of 20x an 8.5x compared to 17x and 7x previously. We have also reduced the WACC we apply in the DCF from 9.0% to 8.5% given the improved outlook, particularly around margins. The net result is a 37% increase in our PT to $24.00.
Based on yesterday's closing price of $26.41, it seems Bell Potter sees Eagers Automotive shares as slightly overvalued.
The broker has a "hold" recommendation and said the key risks to the upside are an accretive acquisition in the next
several months and a stronger H2 result than anticipated.
Elsewhere, Macquarie has a price target on Eagers shares of $27.33.
