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Kar Auction Services Inc (KAR)
NYSE:KAR
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Kar Auction Services
(NYSE:KAR)66Neutral
Positive Factors
Earnings Growth
Volume growth and expense control led to a 30.8% increase in Marketplace adjusted EBITDA to $30.9 million.
Market Share
KAR has a 70% to 75% market share in the off-lease auction use.
Negative Factors
Supply Constraints
Management continues to see pressure on commercial vehicle volumes in 2025 due to lower off-lease maturities.
Kar Auction Services (KAR) vs. S&P 500 (SPY)
Market Cap
$2.32B
Dividend YieldN/A
Average Volume (3M)732.62K
Price to Earnings (P/E)47.5
Beta (1Y)1.06
Revenue Growth6.47%
EPS GrowthN/A
CountryUS
Employees4,500
SectorConsumer Cyclical
Sector Strength53
IndustryVehicles
Share Statistics
EPS (TTM)0.46
Shares Outstanding106,910,774
10 Day Avg. Volume1,006,909
30 Day Avg. Volume732,617
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.32
Price to Cash Flow (P/CF)18.10
P/FCF Ratio11.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$25.00Price Target Upside15.31% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
Kar Auction Services Business Overview & Revenue Model
Company DescriptionKar Auction Services (KAR) is a leading provider of vehicle auction services and related technology solutions in North America. The company operates through its extensive network of physical and digital auction platforms, facilitating the exchange of used and salvaged vehicles. KAR serves a diverse range of customers, including automotive manufacturers, financial institutions, insurance companies, and dealers, by offering a comprehensive suite of services aimed at streamlining the vehicle remarketing process.
How the Company Makes MoneyKAR generates revenue primarily through transaction fees and ancillary services provided during vehicle auctions. The company's auction platforms, such as ADESA, charge sellers a fee for listing vehicles and buyers a fee upon successful purchase. In addition to these fees, KAR offers value-added services, including vehicle inspection, reconditioning, transportation, and financing solutions, which contribute to its revenue stream. The company's digital auction platforms enhance its reach and operational efficiency, allowing for higher transaction volumes and customer engagement. Strategic partnerships with automotive manufacturers and financial institutions further bolster its earnings by ensuring a steady supply of vehicles and expanding its customer base.
Kar Auction Services Financial Statement Overview
Summary
Kar Auction Services is showing signs of recovery with strong revenue growth and improved profitability metrics. The company's cash flow is robust, supporting operational needs and investment capabilities. However, the balance sheet reflects a need for cautious management of debt and equity to ensure long-term stability.Income Statement
Kar Auction Services shows a positive trend in revenue growth with a 8.71% increase over the past year, indicating recovery. The gross profit margin is healthy at 46.54%, reflecting operational efficiency. Net profit margin improved to 6.14%, a significant turnaround from the previous year's loss. EBIT and EBITDA margins are at 10.19% and 21.06% respectively, showing improvement but still reflecting moderate operational challenges.67
Positive
Balance Sheet
The debt-to-equity ratio stands at 0.21, which is manageable but suggests reliance on debt financing. Return on equity (ROE) is 8.19%, indicating moderate profitability relative to shareholder equity. The equity ratio is 39.03%, showing a relatively balanced capital structure. However, the decrease in stockholders' equity over time is a concern.60
Neutral
Cash Flow
The company displays strong cash flow management with a 30.73% increase in free cash flow year-over-year. The operating cash flow to net income ratio of 2.66 highlights robust cash generation from operations. Free cash flow to net income ratio is 2.18, showing effective conversion of earnings into cash.72
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.79B | 1.65B | 1.52B | 2.25B | 2.19B | Gross Profit |
| 832.20M | 777.50M | 685.10M | 951.70M | 902.90M | EBIT |
| 182.20M | -5.20M | 173.70M | 210.60M | 136.40M | EBITDA |
| 274.90M | 110.80M | 258.00M | 237.40M | 325.60M | Net Income Common Stockholders |
| 109.90M | -154.10M | 28.60M | 66.50M | 500.00K |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 143.00M | 93.50M | 225.70M | 190.00M | 752.10M | Total Assets |
| 4.62B | 4.73B | 5.12B | 7.42B | 6.80B | Total Debt |
| 282.90M | 427.40M | 573.70M | 2.18B | 2.22B | Net Debt |
| 139.90M | 333.90M | 348.00M | 1.99B | 1.47B | Total Liabilities |
| 3.28B | 3.40B | 2.99B | 5.31B | 4.63B | Stockholders Equity |
| 1.34B | 1.94B | 2.13B | 2.10B | 2.17B |
| Cash Flow | Free Cash Flow | |||
| 238.40M | 183.40M | -473.40M | 304.70M | 283.00M | Operating Cash Flow |
| 291.40M | 235.40M | -412.50M | 413.20M | 384.40M | Investing Cash Flow |
| -70.90M | -83.50M | 2.14B | -1.22B | -326.60M | Financing Cash Flow |
| -173.90M | -279.90M | -1.61B | 210.40M | 194.80M |
Kar Auction Services Technical Analysis
Positive
21.68
Price Trends
20.57
Positive
19.46
Positive
18.23
Positive
Market Momentum
0.37
Negative
59.43
Neutral
82.43
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KAR, the sentiment is Positive. The current price of 21.68 is above the 20-day moving average (MA) of 20.98, above the 50-day MA of 20.57, and above the 200-day MA of 18.23, indicating a bullish trend. The MACD of 0.37 indicates Negative momentum. The RSI at 59.43 is Neutral, neither overbought nor oversold. The STOCH value of 82.43 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for KAR.
Kar Auction Services Risk Analysis
Kar Auction Services disclosed 43 risk factors in its most recent earnings report. Kar Auction Services reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Kar Auction Services Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $52.94B | 36.71 | 17.52% | ― | 11.00% | 6.53% | |
74 Outperform | $26.92B | 52.86 | 7.24% | 1.10% | 18.26% | 141.71% | |
72 Outperform | $5.27B | 12.06 | 12.29% | ― | 16.11% | -24.72% | |
66 Neutral | $2.32B | 47.53 | 8.19% | ― | 6.47% | ― | |
63 Neutral | $7.12B | 10.35 | 28.17% | ― | -0.68% | -25.24% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% | |
46 Neutral | $2.51B | ― | -68.22% | ― | -11.35% | -837.48% |
* Consumer Cyclical Sector Average
Performance Comparison
KAR
Kar Auction Services
21.68
5.93
37.65%
ABG
Asbury
255.40
48.98
23.73%
AN
AutoNation
171.69
26.51
18.26%
CPRT
Copart
54.26
-0.36
-0.66%
MANU
Manchester United
13.99
-0.38
-2.64%
TSE:RBA
RB Global
145.70
45.69
45.69%
Kar Auction Services Earnings Call Summary
Earnings Call Date: Feb 19, 2025 | % Change Since: 8.02% | Next Earnings Date: May 6, 2025
Earnings Call Sentiment Positive
OPENLANE's fourth quarter and full-year 2024 results demonstrate strong financial performance, driven by significant growth in Marketplace and dealer volumes. The company is optimistic about its long-term growth prospects, thanks to strategic investments in technology and customer experience. However, challenges remain due to low off-lease maturities and macroeconomic uncertainties.Highlights
Strong Fourth Quarter and Year-End 2024 Performance
OPENLANE reported a 12% increase in consolidated revenue and an 18% increase in consolidated adjusted EBITDA for the fourth quarter. Marketplace volumes rose by 9%, and dealer volumes saw a significant 15% increase.
Consistent Marketplace Growth
The Marketplace segment generated $31 million in adjusted EBITDA during the fourth quarter, marking a 30% increase. For the full year, Marketplace adjusted EBITDA grew by 24%.
Robust Cash Flow and Strong Balance Sheet
OPENLANE generated $293 million in cash flow from operations for 2024, with a gross merchandise value increase of 12% to $27 billion.
Positive Outlook for 2025 and Beyond
With strategic investments in technology and customer experience, and expected volume growth from lease maturities starting in 2026, OPENLANE is optimistic about long-term growth potential.
Successful Dealer-to-Dealer Growth
Dealer volumes increased by 15% in Q4 2024, with growth in both the United States and Canada, indicating strong dealer engagement and platform adoption.
Return of a Large OEM Client
OPENLANE regained a significant off-lease remarketing business from a large OEM, highlighting its competitive advantage in technology and customer service.
Lowlights
Challenging Off-Lease Maturity Environment
2025 is expected to be a challenging year due to low off-lease vehicle maturities, stemming from weak lease originations in 2022.
Impact of Strong US Dollar
The strong US dollar is creating some translation headwinds, potentially affecting profits from Canadian and European operations.
Continued Macro Uncertainties
OPENLANE is facing a range of macroeconomic uncertainties, including potential impacts of a strengthening US dollar and tariff-related trade challenges.
Company Guidance
During the conference call, OPENLANE provided guidance for 2025, indicating an expected adjusted EBITDA range of $290 million to $310 million and operating adjusted earnings per share between $0.90 and $1. The company also anticipates capital expenditures of $50 million to $55 million. Despite challenges such as the low point in off-lease maturities and macro uncertainties, OPENLANE remains optimistic due to its strategic investments in growth and innovation, particularly in the U.S. dealer-to-dealer market. The company highlighted strong performance in 2024, with a 12% increase in consolidated revenue and an 18% rise in adjusted EBITDA. The Marketplace segment saw a 9% increase in volumes and a 30% growth in adjusted EBITDA for the fourth quarter. Additionally, the Finance segment reported an impressive adjusted EBITDA of $159 million for the year, showcasing its strength and synergies with the Marketplace business.Kar Auction Services Corporate Events
Business Operations and StrategyFinancial Disclosures
Kar Auction Services Highlights Strategic Growth and Innovation
Positive
Nov 19, 2024
OPENLANE, Inc. is set to hold a virtual investor update, emphasizing strategic growth, innovation, and risk management in the wholesale used vehicle market. With a focus on leveraging technology and AI to enhance customer experiences, the company highlights its strong cash flow and investment potential. The presentation underscores OPENLANE’s competitive advantages and its commitment to delivering shareholder value through improved financial reporting and a robust product pipeline.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.