used car sales online in the mid-nineties.
Currently, it is helping consumers research
and purchase new and used cars. Autobytel.
com, along with at least seven other websites
it owns, also helps every major automobile
manufacturer market its brand online, and
helps thousands of dealers connect with
The company generates 95% of its revenue
from online purchase request referrals it sells
to dealers and manufacturers. Purchase
requests are from consumers seeking
information or quotes regarding pricing and
availability of new or used vehicles or for
vehicle financing. The rest of the company's
revenue comes from advertising. Obviously,
Autobytel's livelihood depends almost wholly
on the strength of domestic and imported
vehicle sales in North America.
February 27, 2012
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|With a declining car market for much of the past decade, Autobytel has not seen profitability since
2004. At the beginning of this month, however, the company announced that it will see its first
profitable year since then, and will be releasing fourth quarter and year end results on March 1.
For the first nine months of 2011, it lost a penny per share in the first quarter, broke even in the
second, and earned a penny per share in the third quarter bringing it to break even. This means
that even a penny, which is what is expected for the fourth quarter will bring it into profitability on the
Four major analysts cover the stock, and for all of 2011, they have been playing catch up,
forecasting a three cent loss in the first quarter, a one cent loss in the second, and break even in
the third. Within the last week or two, first quarter earnings forecasts for 2012 have been bumped
up from 1 cent to 2 cents, and full year 2012 results are expected to be 9 cents, up from 7 cents.
This gives the stock a forward P/E just above 10, and with 25% earnings growth expected for the
next five years, an effective PEG of around 0.4.
Revenues seem to have hit rock bottom in the third quarter of 2010 at $12.9 million. Sales have
been climbing since then and hit $16.3 million in the most recently reported quarter. Revenues are
expected to be just under $16 million for the fourth quarter of 2011, and just over $17 million for the
fist quarter of this year. 2011 full year revenues are expected to be $63.2 million, and $73.6 million
The company has around 47 million fully diluted shares out, meaning it needs to earn close to a $1
million in one quarter to hit 2 cents per share. Net income, which broke into positive territory in the
middle of last year, was $200,000 in the second quarter, and $450,000 in the third.
Detroit has had an exceptional 2011, and looks to do even better in 2012. Car and truck sales in
the U.S. were at 12.8 million in 2011, and are now expected to be more than 14 million in 2012.
Many believe sales could hit and sustain a level near 16 million beyond 2012. Sales are climbing so
fast, in fact, that manufactures are just barely keeping up. Car makers are adding shifts and hiring
thousands of workers throughout the country. 38,000 jobs were added last year, and at least
another 13,000 are expected to be added this year.
An inability to keep up with rising sales may hinder Detroit's profits a tiny bit, but higher prices
coupled with high demand could actually help Autobytel immensely. A big sign that slightly higher
prices will not hamper demand comes from the historically high average age of cars on the road.
This has been due to a bad economy, and an improving one along with a huge replacement need
may be the perfect storm going forward.
The majority of gains in car sales last year came from Detroit’s big three. Premium imports like
Mercedes and BMW were up a whopping 32% and the only softness came from imports as a whole,
where Asian manufacturers were basically flat. The earth quack in Japan and flooding in Thailand
were partly to blame, and most expect imports to begin rising once again in 2012.
Autobytel's stock is hovering right around a dollar, a dangerous level for listed securities. It has
climbed from around $0.70 at the beginning of this year. Volume is not anything special for this
stock, although it has started to become more consistent this year. Back in 2004, the last time it
was profitable, the stock traded as high as the mid teens. It had earned 17 cents per share in 2003,
and 14 cents per share in 2004 when it had around 5 million less shares out and revenue had
peaked at $160 million. Currently, ABTL has $9.2 million in cash, and $5 million in debt.
The company recently announced a share buy back plan, and as of the end of January, only 0.1%
of the float was sold short. Management has also started rolling out some revamping of their
websites, and are going with a new motto, “Your Lifetime Automotive Advisor.” Earnings are due out
Thursday of this week, and given the strength in the U.S. auto market, and the fact that this is a
relatively well known name but not a very well known stock, traders may soon find out just how much
horsepower is under this company's hood.