AutoCanada Has Soared to a 52-Week High After Earnings

AutoCanada (TSX:ACQ) is an Edmonton-based automotive dealer. Shares have surged 55.6% over the past month as of mid-afternoon trading on November 19. The auto sector has faced big challenges since early 2018, but there are signs that it may be heading towards a recovery into the next decade.

October auto sales were down 0.9% in Canada according to the Automotive News Data Center. DesRosiers Automotive Consultants estimated that sales were only down 0.1% from the prior year. David Adams, head of the Global Automakers of Canada, said that it was encouraging that light vehicle sales were still near historic highs.

AutoCanada released its third-quarter 2019 results on November 7.

Revenue rose 13.3% year-over-year to $115 million and total vehicle sold rose 2.8% to 19,652. It represented another quarter where AutoCanada managed to outperform the broader market. Adjusted EBITDA soared 100.7% to $32.5 million and same store unit sales posted growth of 9.1%. New vehicle gross profit per retail unit increased 12.1% to $377 per unit.

The bounce-back at AutoCanada is encouraging, but there are still concerns in this industry as we look ahead to the New Year. It has managed to outpace broader auto sales in Canada, but it needs to improve its balance sheet going forward.

Shares last possessed a price-to-earnings ratio of 5.4 and a price-to-book value of 0.9. The stock also offers a dividend yield of 3.1%.