Shares digital

Pendragon (PDG) – Finals PTP: £34.8m (£69.4m) Divi: 4p (3.45p)

2007 is a year Pendragon shareholders will want to forget. Three profit warnings and a fall of 73% in the share price underlines the group’s fundamental problems. Although new car registrations rose by 2.5% last year, margins were badly eroded with profitability on each car falling from £385 to £300. There was especially strong pressure on margins in the demonstrator market.

Although there have been rumours that Inchcape (INCH) might bid for the group this is unlikely. Pendragon’s debt is £332 million. Its range might also not appeal to Inchcape, which is seeking to grow in emerging markets. House broker Arden Partners is, perhaps optimistically, forecasting earnings of 5.7p this year, placing the shares on a PE of just over six.

Shares says: Prospective 11.4% yield may provide a floor for the shares, if it can maintain the pay out.

by: John Marshal