Edison Investment Research Limited
London, UK, 30 July 2021
Lookers (LOOK): Restoring reputation as the market EVolves
Following a challenging 2019, the COVID-19 pandemic extended the task of restoring stakeholder confidence in Lookers, one of the UK's leading automotive retailers. With the legacy issues now largely dealt with, Lookers can address the challenges and opportunities presented by COVID-19 and the evolution of the UK car market as the adoption of electric vehicles (EVs) accelerates. The strong balance sheet supports continued investment in technology and brands and, with a leading market position, Lookers appears well placed to resume profitable growth from 2022.
UK car retailers are trading on a substantial P/E discount to the general retail sector of around 45% and Lookers FY22 P/E of 6.2x based on our estimates is at the low end of its peer group. Assuming it successfully executes its strategy, restores the investment proposition and resumes dividend payments, there is clear potential.
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