KAR - Embedded Expectations Analysis - 2021 01 28
KAR Auction Services, Inc. (KAR:USA) currently trades below recent averages relative to UAFRS-based (Uniform) earnings, with a 16.3x Uniform P/E. At these levels, the market has expectations for profitability to remain stable, but management may be concerned about services conducted in their facilities, dealer-to-dealer opportunities, and their BacklotCars and TradeRev integration plansSpecifically, management may lack confidence in their ability to successfully execute their BacklotCars and TradeRev integration plans, further make strategic moves that will accelerate TradeRev growth, and improve the accessibility of their technology. They may also have concerns about delays in vehicle repossession, and they may be overstating the sales volume growth opportunities in the dealer-to-dealer space. Moreover, management may be concerned about the shortage of used car supply in the wholesale marketplace, their need to continue servicing customer vehicles in their facilities, and the impact of business model changes on their cost structure
KAR Auction Services is a holding company. Through its subsidiaries, the company provides used vehicle auctions and related vehicle remarketing services in North America and Europe. The company facilitates a marketplace by providing auction services for sellers of used, or whole car, vehicles through its North American physical auction locations. The company's segments include: ADESA, Inc.'s Auctions, which provides whole car auctions and related services to the vehicle remarketing industry in North America through online auctions and auction facilities; and Automotive Finance Corporation, which provides floorplan financing to independent used vehicle dealers through branches throughout North America.
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