One of the largest ASX consumer discretionary stocks has been tipped to rise significantly following earnings results.
It has largely been a down year for the sector, which relies heavily on consumer spending and household confidence. These have both come under pressure amid elevated living costs and high interest rates.
However, following earnings results, Bell Potter has issued fresh guidance on Eagers Automotive Ltd (ASX: APE).
Eagers is the largest automotive retailing group in the Australian market.
The company's core business involves the ownership and operation of motor vehicle dealerships covering a diversified portfolio of automotive brands.
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What did the company report?
Yesterday, the company released half-year results, which included revenue rising 24% to $8.05 billion and net profit after tax up 23% to $165.2 million.
Other results included:
- Underlying EBITDA up 23% to $364.6 million
- Ordinary interim dividend up 4% to 25 cents per share, fully franked
- Liquidity at $2.61 billion and net debt at $674.9 million as at 30 June 2026
- Acquisition of CanadaOne Auto Group contributed $40.5 million in profit before tax across two months
Despite the results, this ASX consumer discretionary stock dipped 5% on the announcement.
However, Bell Potter sees this as a clear buying opportunity.
Strong results
In yesterday's report, Bell Potter said Eagers Automotive delivered a strong H1 FY 2026, with underlying operating earnings coming in 4% above Bell Potter's forecast.
This was driven by stronger-than-expected revenue and better results in both Australia and Canada.
The 25-cent fully-franked final dividend was also slightly ahead of expectations.
Bell Potter sees a positive outlook for H2, noting the resilience of the business, continued market-share gains, and opportunities to optimise operations and pursue disciplined growth across Australia and North America.
While Eagers does not provide formal guidance, Bell Potter expects a significant improvement in H2 earnings, helped by a full six-month contribution from Canada.
Bell Potter has upgraded revenue forecasts by around 1% for FY26 to FY28, but trimmed underlying operating PBT forecasts by around 2% due to slightly lower margin assumptions in Australia and Canada.
Healthy upside for this ASX consumer discretionary stock
Based on this guidance, Bell Potter has retained its buy recommendation on this ASX consumer discretionary stock.
The broker has a $27.50 price target, indicating almost 24% upside from current levels.
This TP is >15% premium to the share price so we maintain our BUY recommendation. There is perhaps a lack of catalysts this half but we see continued good monthly VFACTS data in Australia (particularly for Toyota and BYD) as providing support and confidence in a strong H2 result.
