Lookers

Motor retailer Lookers accelerated higher on another set of record numbers to December. Bossed by chief executive Ken Surgenor and finance director David Dyson, Lookers reached a significant milestone last year, lifting turnover comfortably past £1bn for the first time. The top line grew by 14%, profits before tax sped up 89% to £26.5m and the total payout lifted 10% to 12.1p. On the franchised car retailing side, Lookers fostered and expanded its ties with manufacturers, buying a number of dealerships including the Volkswagen franchise for Northallerton and Darlington, and Saab in Chester. Significantly, the company also boosted its presence in the 'steadier, higher-margin' car parts after-market with the acquisition of FPS Distribution. Post year-end, Lookers announced the addition of Bristol Trade Centre, the biggest used car supermarket in the south-west of England, for £8.5m. Even though industry analysts are forecasting a slight fall in new car registrations in 2005, Surgenor and Dyson point out demand for new cars remains healthy, having exceeded 2.4m units in every year since 2001. For December 2005, shop broker Numis is leaving forecasts unchanged following a small upgrade at the end of January. Investors can expects pre-tax profits of £18.2m and earnings of 36.6p, before a rise to £20m and 40p EPS for 2006. Forward p/e ratios of 9.1 and 8.3 look great value for Lookers, which is growing in prestige. Strong buy.

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Sector: Automobiles & Parts

Companies: Lookers

Market cap: £116.7m

PE Forecast: 9.1

Share price: 333.5p

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