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Morningstar, Inc.

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Equity Bottom-Up

Carsales.com shares look moderately overvalued following the 25% rally over the past nine months. At the current market price of AUD 12.30, the shares are 12% above our AUD 11.00 fair value estimate, with a fiscal 2017 PE ratio of 25 times and a PE/EPS growth, or PEG ratio, of around 2.5 times. The forward PE ratio has fluctuated between 15 and 29 times since the company listed in 2009, but EPS growth is slower now than it's been since listing.We expect the price/fair value premium to narrow as financial results are announced and EPS growth expectations moderate. We maintain our narrow economic moat rating, based on the network effect within the Australian automotive advertising business, which comprises around 80% of group EBITDA. We also maintain our medium fair value uncertainty rating.Analyst: Gareth James

Carsales.com shares look moderately overvalued following the 25% rally over the past nine months. At the current market price of AUD 12.30, the shares are 12% above our AUD 11.00 fair value estimate, with a fiscal 2017 PE ratio of 25 times and a PE/EPS growth, or PEG ratio, of around 2.5 times. The forward PE ratio has fluctuated between 15 and 29 times since the company listed in 2009, but EPS growth is slower now than it's been since listing.We expect the price/fair value premium to narrow as financial results are announced and EPS growth expectations moderate. We maintain our narrow economic moat rating, based on the network effect within the Australian automotive advertising business, which comprises around 80% of group EBITDA. We also maintain our medium fair value uncertainty rating.Analyst: Gareth James

Carsales.com Looks Overvalued Following Share Price Rally

CAR Group

Carsales.com Looks Overvalued Following Share Price Rally