Is the consensus too optimistic?Here is the fly in the ointment:
ACQ will have $1.9 billion in revenue for 2014 of which approx. $350 million came from acquisitions made during the years 2013 and 2014. The 2014 acquisitions (so far) had annual revenue of around $540 million so another $275 million will accrue to 2015.
So,
$1.9 B+ $0.275B+ 2015 acquisitions impact = 2015 revenue
Assuming low Y/Y growth in same store sales in 2015 (realistic as car sales cycle is peaking imo) and 12 acquisitions with incremental annual sales of $600 million (optimistic) we have to add another $300 million ($600 million/2 = average 2015 increment) in 2015. Then we get:
$1.9B + $0.275B+ $0.30B = approx. $2.5B in revenue for 2015
This results in EPS of about $2.50 according to my numbers (considering that the acquisitions will require another 10% dilution from share issuance).
Even if same store sales were to grow 5% (+0.10B on 2014 $1.9B base), achieving the consensus +$3 billion in revenue for 2015 and EPS of $3.50 is next to impossible imo.
Valuation: 18X $2.50 = $45 (which is still using a generous growth multiple and higher than US comps)...
According to my projections, Q3/2014 EPS will come in around $0.70 showing a 40% Y\Y improvement due to the $145 million increase in revenue coming from acquisitions kicking in during the quarter coupled with 9% Y/Y same stores sales growth... However after that the comparisons will get much less favorable and will be very likely disappointing imo... I am looking at $0.50 EPS in Q4/2014 and $2.20 EPS for the 2014 year.
orepass