After nearly three years in the shareholder value junkyard, automotive retailers are racing back fast.
Two consecutive quarters of average gains topping 40 percent put the retail sector on top of the shareholder return pack for 2001. A second-quarter improvement of 46.7 percent, led by double-digit gains for all participants, put the automaker and supplier sectors to shame and soundly beat leading market benchmarks.
'Clearly there was a viewpoint that dot-com automotive retailing was very much going to impact this segment,' said Mike Burwell, partner in the transaction services group at Pricewaterhouse-Coopers. 'With those dot-com washouts ... that's swayed valuations back to the retailers.'
Of course, automotive retailers were digging themselves out of a gaping hole, and most have yet to rebound completely. The group still averages a three-year decline of 44.2 percent.
This year, though, strong used-car sales and parts and service operations also have helped retailers weather the weakened economy. First-quarter results for many of these companies beat analysts' expectations, often by significant amounts, Burwell said.
The improvement already has restored the retail group to an average 85.3 percent return for the most recent one-year period. Automakers and suppliers, conversely, posted 4.2 percent and 20.4 percent declines during that time, while the Dow Jones Industrials could only muster a 2 percent gain.
Individually, Sonic Auto leads the index for the second quarter and the three-year period, with respective gains of 144.9 percent and 132.4 percent. Carmax leads the one-year list with an improvement of 372.5 percent.
But one retailer dropped off the index for being delisted from the Nasdaq stock exchange in February after its market value fell below listing standards. Hometown Auto Retailers now trades on the over-the-counter bulletin board for less than $1 per share, down from $9 when it went public in 1998.