TRA - Turners Automotive Group

[777]

I was wondering the same, but it seems that the dividend was paid in April 2025 this year, whereas last year it was March 2024.  So just timing.

Paid in March that year to avoid the increase to 39c tax rate effective 1st April for Trusts.

[Pierre]

Closed today at $6.85 - a new ATH. The good news continues.

[winner (n)]

Inspired by some work esteemed Snoopy did on other channel re Nvudia I did this for Turners

Grahams Formula V = EPS(8 + 2g)

So 6.85 = .43.3 x (8 +2g)

Solving for g(rowth) gives 8 ....market pricing in a 8% growth rate for Turners

What's the CAGR for last 10 years?

[Basil]

Solving that formula does not give 8.  Remember its no PE of (actually 8.5) + 2G   

$6.85 = eps of (last year) 43.3 cps x X.
X must be 15.81

X = 15.81 and we deduct 8.5 no growth PE from that then 2g must be 7.31, therefore g = 3.66.

10% CAGR in EPS and 14% CAGR in dividends for the last decade.
___________________________________________________________________________________________________

Reverting to my well proven GARP value screening formula which is a derivation of that model using 1G and forward eps I get
V = 48, (from Forsyth Barr research for FY26) x (8.5 + 1G) and I use 10% as g because they've proven they can do that and have a clear runway of growth for the next ~ 7 years I get
48 x (8.5+ 10) = $8.88 

Conclusion, I see no reason whatsoever to sell any of my shares and will remain fully involved in the dividend reinvestment program.
I still think there's a lot of value there where the stock is priced.  The following is a a complete list of all stocks on the NZX that have grown EPS by a 10% CAGR over the last decade that trade on a PE less than 18.5. 
.
.
.
.
There are none apart from TRA.

[Dolcile]

Solving that formula does not give 8.  Remember its no PE of (actually 8.5) + 2G   

$6.85 = eps of (last year) 43.3 cps x X.
X must be 15.81

X = 15.81 and we deduct 8.5 no growth PE from that then 2g must be 7.31, therefore g = 3.66.


10% CAGR in EPS and 14% CAGR in dividends for the last decade.
___________________________________________________________________________________________________

Reverting to my well proven GARP value screening formula which is a derivation of that model using 1G and forward eps I get
V = 48, (from Forsyth Barr research for FY26) x (8.5 + 1G) and I use 10% as g because they've proven they can do that and have a clear runway of growth for the next ~ 7 years I get
48 x (8.5+ 10) = $8.88 

Conclusion, I see no reason whatsoever to sell any of my shares and will remain fully involved in the dividend reinvestment program.
I still think there's a lot of value there where the stock is priced.  The following is a a complete list of all stocks on the NZX that have grown EPS by a 10% CAGR over the last decade that trade on a PE less than 18.5. 
.
.
.
.
There are none.

Mic drop

[Basil]

Best comparative in my opinion and one Forsyth Barr use, (there isn't a perfect one due to the diversified nature of TRA's business) is Eagers Automotive in Australia.  Ticker code APE
Been around a long time and its a fast growing business with broad exposure to the Australian Automotive industry.
In 2014 they earned 43 cps https://web-assets.cdn.dealersolutions.com.au/modular.multisite.dealer.solutions/wp-content/uploads/sites/2892/2021/12/29123405/eagers_annual_report_2014.pdf
Last year they earned 80 cps.
Their CAGR in EPS over the last decade has been 6.5%, 3.5% lower than TRA.
Currently trading on 15.6 times forecasted FY26 EPS.  If TRA were on the same spot valuation it would be 15.6 x 48 cps = $7.49 now and one year hence from now 15.6 x forecasted FY27 eps of 52.9 cps = $8.25

I think its not that hard to make the case that with TRA EPS growing faster than APE and its EPS growing at a more steady rate, (APE has been very volatile with large cyclical swings in new car sales over the years in line with changing economic conditions), and TRA including servicing going forward (APE already do this) that TRA actually deserve a valuation premium over APE. 

[winner (n)]

Basil ....compartives to ASX peers one needs to apply a NZX discount....be a much smaller and less liquid market

[Basil]

You can make that argument Winner but APE are growing quite a lot slower, (matured business ?), and have far more variability with their earnings.  As you can see here, https://www.marketscreener.com/quote/stock/EAGERS-AUTOMOTIVE-LIMITED-6492637/finances/ their eps was actually $1.21 in 2022 and is forecast to only get back to that same level by FY27, so no growth over those 5 years !  Comparatively over that same historical and forecast timeframe, Turners earned 36 cps in FY22 and is forecast to earn 53 cps in FY27.  Turners is clearly growing strongly and Eagers Automotive, frankly, you could make the case is now a mature business that's treading water and yet commands a forward PE of nearly 16 times earnings.

[winner (n)]

Bens other formula is thevBennGraham Number

For what its worth Ben if he used that number would only be looking at buying Turners under $5.65

But methinks $8 on card sooner than later

[Dolcile]

Anyone care to buy at $6.85 to clear the way for $7 to close the week? :-)

[Basil]

Anyone care to buy at $6.85 to clear the way for $7 to close the week? :-)

LOL mate, why do I suspect you're like me and value your portfolio at the end of each week   

[seaweed]

Anyone care to buy at $6.85 to clear the way for $7 to close the week? :-)

Who's that 10,000 order at 6.80. Basil is that you? I might buy more next few weeks plus a few other companies. Have got a fairly big investment maturing on 4th July and that will be going into the market and not another term deposit. Very hard buying TRA, nobody wants to sell.

[Basil]

Who's that 10,000 order at 6.80. Basil is that you? I might buy more next few weeks plus a few other companies. Have got a fairly big investment maturing on 4th July and that will be going into the market and not another term deposit. Very hard buying TRA, nobody wants to sell.

Hi Seaweed, nice to hear from you mate. The problem for buyers is why would anyone want to sell....  In terms of my position, I'm very content with what I have already as its been my #1 investment position for quite some time now.  That said,  I'm more than happy to gradually accumulate more each quarter through the dividend reinvestment program.  (Note: Turners goes ex a 9 cent fully imputed dividend on 11 July, paid 29 July). https://api.nzx.com/public/announcement/452221/attachment/444153/452221-444153.pdf
I stand 100% behind my comments above and believe Turners are still a compelling buy for long term growth at the current level but as I have a boatload already, I am very content to sit back and enjoy the journey in the years ahead.    Todd, Tina, Aaron and the others...what a team !

[Dolcile]

LOL mate, why do I suspect you're like me and value your portfolio at the end of each week     

Guilty as charged 

[Dolcile]

Hi Seaweed, nice to hear from you mate. The problem for buyers is why would anyone want to sell....  In terms of my position, I'm very content with what I have already as its been my #1 investment position for quite some time now.  That said,  I'm more than happy to gradually accumulate more each quarter through the dividend reinvestment program.  (Note: Turners goes ex a 9 cent fully imputed dividend on 11 July, paid 29 July). https://api.nzx.com/public/announcement/452221/attachment/444153/452221-444153.pdf
I stand 100% behind my comments above and believe Turners are still a compelling buy for long term growth at the current level but as I have a boatload already, I am very content to sit back and enjoy the journey in the years ahead.    Todd, Tina, Aaron and the others...what a team !

Totally agree.  On a related note, I was pleased to see at the back of the annual report, that as well as the directors interest being well aligned,  that Todd has circa 1.2m shares !