The ASX small-cap stock Autosports Group Ltd (ASX: ASG) has already driven higher this year, with it up more than 90% at the time of writing, as the chart below shows. But, I think there's potential for further gains at a share price of $3.46.
Autosports describes itself as a specialist prestige and luxury vehicle retailer. It operates more than 75 businesses across the metropolitan markets in Sydney, Melbourne, Brisbane, Gold Coast, and Auckland. It has new and used vehicle dealerships, motorcycle dealerships, used vehicle outlets, and collision repair facilities. It also provides finance and insurance services, aftermarket products, spare parts, vehicle servicing, and collision repair services.
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Why this is a good time to look at the ASX small-cap stock
The company says it's benefiting from interest rate reductions, which are helping return to more normalised operating conditions. Autosports said that this environment is delivering improved net margins and operating leverage for the business in FY25. The company also said that the luxury segment demonstrated resilience.
What makes me particularly optimistic about the business is its outlook for FY26, which started with "positive momentum". July 2025 saw strong trading, with new vehicle orders up 20.2% and revenue up 13.5%.
The business is growing in multiple ways, with Geely Holding Group, including Geely Leichhardt and Volvo Cars Gold Coast greenfield dealerships, both opening this month. The company also announced earlier this year that it's representing the Porsche brand with the acquisition of Porsche Centre Canberra, which has now been completed.
The company said that improving new vehicle market conditions are expected to continue. Used vehicles, servicing, parts and collision repair divisions are expected to grow at a predictable and resilient pace.
Higher revenue through existing dealership facilities is expected to improve leverage.
The ASX small-cap stock also noted that the launch of Mercedes-Benz Southport is expected in FY27.
Autosports Group said it continues to actively assess further 'on strategy' acquisition opportunities that can add to earnings.
Expectations of profit growth
The company is forecast to deliver very pleasing profit growth over the next few years.
Using the projections on Commsec, the business is projected to make 25.3 cents of earnings per share (EPS) in FY26. That puts the current Autosports share price at less than 14x FY26's estimated earnings at the time of writing.
EPS could then rise to 34.7 cents in FY27 and 40.4 cents in FY28, according to the projection on Commsec.
I think it looks very undervalued for a business that could grow profits by 60% between FY26 and FY28.
