Peter Warren Automotive Holdings' (ASX:PWR) guidance for fiscal year 2026 implies a "minimal" underlying profit before tax of up to roughly AU$3 million in the second half, as trading conditions worsened heading into the most important period of the year, Jarden said in a June 1 note.
May and June typically contribute a material portion of full-year profits for automotive dealers, but Peter Warren faces multiple headwinds, including a shift to smaller and lower-priced new cars, competition impacting front-end gross margin, and a supply shortage with orders outpacing deliveries, the equity research firm said.
"Feedback continues to suggest that, at a headline level, new car demand has remained relatively resilient," Jarden said. "However, with broad expectations of house price declines to come, we note new car sales historically have not performed well in this environment."
Jarden's earnings estimates for Peter Warren assume "essentially no underlying profit improvement" in the first half of fiscal year 2027 compared with the second half of fiscal year 2026, as well as a lower average price and volume.
Despite a sell-off, the stock doesn't screen cheaply versus history on an earnings multiple basis, the investment firm said.
It still maintained a buy rating on Peter Warren, saying that the company's net tangible assets sit at a comfortable premium to its share price, while reducing the target price to AU$1.55 from AU$2.50.
Shares of Peter Warren gained 1% in recent Tuesday trade.
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