5th Jun 2024. 9.01am
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Auto Trader accelerates after strong trading update
Those of you who read our Weekly Briefing on Friday may have seen that we covered Auto Trader’s (AUTO) impressive full year trading statement.
The share’s surged more than 11% after the car buying platform reported significant jumps in profit and revenue, driven by strong demand in the used car market.
For the year ending in March, revenue increased by 14% to £570.9 million, and pretax profit rose by 18% to £345.2 million. The firm attributed the growth to higher average revenue per retailer, fueled by increased adoption of additional products and services. The new financial year has started well, with expected reductions in operating losses at Autorama, which it acquired in 2022. CEO Nathan Coe expressed confidence in the company’s growth prospects and the potential to expand its online car-buying marketplace.
Auto Trader is now ten times larger than its nearest competitor and this dominant market position was a key factor behind our original buy recommendation back in July 2022.
The company proposed a final dividend of 6.4p per share, bringing the total annual dividend to 9.6p, up from 8.4p last year.
AUTO Daily Candle Chart
Aviva “in great health” as Q1 trading update underlines core strengths
Aviva (AV.) have delivered a strong set of Q1 results, showing growth and a resilient capital position.
CEO, Amanda Blanc, remarked, “Aviva is in great health. We are financially strong, we are trading well, and our investments in new products and customer service are paying off. We have clear competitive advantages – in our brand, our scale, and our diverse business – which are driving consistently strong performance, and giving us real optimism about 2024.”
In Q1 2024, Aviva’s General Insurance premiums surged by 16% to £2.7bn. The UK segment led with a 19% rise to £1.7bn, propelled by impressive growth in personal and commercial lines. In Canada, premiums increased by 11%, reflecting a similar trend.
The company’s combined operating ratio (COR) remained solid at 95.8%. Protection & Health sales rose by 5%, and Wealth net flows increased by 15% to £2.7bn. Aviva’s strategic acquisitions, including Optiom O2 Holdings and Probitas, have bolstered its growth trajectory, while divestments like the exit from the Singapore joint venture have optimised its portfolio.
Looking ahead, Aviva targets ambitious goals, including an operating profit of £2bn by 2026 and sustained shareholder returns with upgraded dividend guidance.
AV. Daily Candle Chart
BP slumps amid credit outlook revision and oil market concerns
BP’s (BP.) share price has dropped more than 3% this week after S&P Global revised its credit outlook for the company from positive to stable. This revision reflects concerns about BP’s slower-than-anticipated debt reduction efforts, dealing a blow to CEO Murray Auchincloss’s efforts to rebuild investor confidence.
Auchincloss, who took the helm in January, has been striving to steer BP through a challenging period marked by the abrupt departure of his predecessor, Bernard Looney, and lingering investor skepticism regarding the company’s strategic shift towards low-carbon initiatives.
The downgrade by S&P Global underscores doubts about the effectiveness of BP’s updated cash allocation strategy in reducing its debt burden. Additionally, BP’s share price decline is exacerbated by broader market trends, including a drop in Brent crude oil prices to near four-month lows following OPEC+’s decision to extend oil output cuts.
This decision has negatively impacted European energy companies as a whole. This confluence of factors has contributed to the downward pressure on BP’s stock value, signalling challenges ahead for Auchincloss as he seeks to navigate the company through a complex and evolving energy landscape.
BP. Daily Candle Chart
Bytes expands workforce to meet surging demand
Bytes Technology (BYIT) has reported strong growth in its preliminary results for the fiscal year ending February 28, 2023. The cloud services company saw significant increases in both revenue and gross profit.
Revenue surged by 26.5%, reaching £184.4 million, while gross profit increased by 20.7%, totalling £129.6 million. The company attributes its success to heightened customer demand for security, cloud adoption, digital transformation, and remote working solutions.
Bytes also expanded its workforce by 20%, totalling 930 employees, to meet the growing demand. Neil Murphy, CEO of Bytes, expressed delight in the positive results, highlighting strong double-digit growth across all business sectors.
He credited the company’s emphasis on high-quality customer service and thanked employees for their outstanding support. Looking forward, Bytes remains optimistic about future growth opportunities, particularly in its chosen markets, and is focused on recruitment and training to ensure continued success.
BYIT Daily Candle Chart
QintetiQ hike dividend and launch £100m buyback
QinetiQ (QQ.) reported strong preliminary results with a 21% revenue increase to £1.91 billion and a 20% rise in operating profit to £215.2 million for the year ended March 31.
Despite challenging US market conditions, the company’s EMEA Services segment showed robust growth, offsetting difficulties in the Global Services segment.
Order intake remained stable at £1.74 billion, with a funded order backlog of £2.87 billion. CEO Steve Wadey credited the company’s success to its skilled workforce and essential services for national defense and security.
QinetiQ increased its full-year dividend and initiated a £100 million share buyback program. Looking ahead, it expects strong growth in EMEA Services and stable performance in Global Solutions, aligning with its 2027 outlook of approximately £2.4 billion in organic revenue at a 12% margin.
QQ. Daily Candle Chart
Softcat maintains full-year outlook as growth trends continue
Softcat (SCT) released a short and sweet trading statement last week in which it maintained its full year outlook.
The IT infrastructure technology and services company said:
“Market conditions and trading in the Period remained consistent with the first half and the Company delivered further growth in gross invoiced income, gross profit and operating profit.
The Board continues to anticipate that full year gross profit and operating profit results will be in line with expectations.”
On the price chart, Softcat continues to carve out an impressive uptrend with prices up more than 20% year-to-date.
SCT Daily Candle Chart
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All content is provided for general information only and should not be construed as any form of advice or personal recommendation. The provision of this content is not regulated by the Financial Conduct Authority.