KAR
KAR Auction Services
Industrial/Transportation
12/15/2014
Presented
| Date | 12/11/2014 |
| Price | $34.20 |
| Market Cap | $4.82B |
| Ent Value | $6.36B |
| P/E Ratio | 71.4x |
| Book Value | $10.90 |
| Div Yield | 0.01% |
| Shares O/S | 140.85M |
| Ave Daily Vol | 1,100,000 |
| Short Int | 0.50% |
Current
| Price | $15.85 |
| Market Cap | $1.72B |
| KAR Auction Services, Inc., together with its subsidiaries, provides vehicle auction services in North America. It operates in three segments: ADESA Auctions, IAA, and AFC. The ADESA Auctions segment offers whole car auctions and related services to the vehicle remarketing industry through online auctions and auction facilities. This segment also provides value-added services, such as auction related, transportation, reconditioning, inspection, title and repossession administration and remarketing, and analytical services. The ADESA Auctions segment sells its products and services through commercial fleet operators, financial institutions, rental car companies, new and used vehicle dealers, and vehicle manufacturers and their captive finance companies to franchise and independent used vehicle dealers. The IAA segment offers salvage vehicle auctions and related services that facilitate the remarketing of damaged vehicles designated as total losses by insurance companies, as well as charity donation, recovered stolen, and low value used vehicles. This segment also provides inbound transportation logistics, inspection, evaluation, salvage recovery, titling, and settlement administrative services. The AFC segment offers floorplan financing, a short-term inventory-secured financing, to independent used vehicle dealers. As of December 31, 2013, the company had a network of 65 whole car auction and 164 salvage auction locations, as well as serviced auctions through 105 locations. The company was formerly known as KAR Holdings, Inc. and changed its name to KAR Auction Services, Inc. in November 2009. KAR Auction Services, Inc. was founded in 2006 and is headquartered in Carmel, Indiana. |
Publicly traded companies mentioned herein: AutoNation Inc (AN), CarMax Inc. (KMX), Copart Inc (CPRT), Ford Motor Company (F), KAR Auction Services Inc (KAR)
Highlights
KAR Auction Services (KAR) is one of the largest whole car and salvage auction operators in the US. Both businesses operate in duopolies, and there are substantial barriers to entry. Favorable tailwinds - in particular, the coming overflow of off lease vehicles into KAR’s physical wholesale auction channel - underpin the presenter’s bullish thesis and long position. At current levels (~$34) he sees a favorable risk/ reward, with little downside risk and roughly 20-30% upside over the next 12-18 months, at a minimum.
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