Usually talking, nice firms hardly ever go on sale. And this is the reason it could pay to reap the benefits of any short-term share price weak point. This week, we’ve seen simply that in what could also be thought of a high-quality development share from the FTSE 100.

It’s left me questioning whether or not I needs to be raiding the again of the couch and snapping up what I can, whereas I can.

What disaster?

The inventory in query is automotive market platform supplier Auto Dealer (LSE: AUTO). Regardless of releasing the kind of full-year numbers most firms would crave yesterday (29 Could), its share price has retreated by a minimum of 12% as I kind.

At first look, this appears somewhat harsh. In spite of everything, income rose to £601.1m, up by 5% from £570.9m within the earlier monetary yr. The common income per retailer — a key metric for the corporate — rose by the identical proportion. Working revenue accelerated 8% increased to a smidgen underneath £377m. What provides?

Like so many issues in relation to investing, it’s not about what occurred; it’s about what folks had been anticipating to occur. On this instance, analysts had been anticipating that income would are available simply above £606m.

Holders additionally appeared to be unnerved by administration’s projections for FY26. Retailer income development of 5% and seven% is predicted. Once more, this seems to be lower than some analysts had been hoping for.

Lagging the index

Regardless of a powerful 2025 previous to outcomes being introduced, Thursday’s drop leaves Auto Dealer barely down for the yr. To compound homeowners’ distress, the corporate has now delivered a worse return during the last 5 years than the FTSE 100 index. And that’s earlier than I’ve factored in dividends!

There’s no rule to say that Auto Dealer’s price received’t proceed falling both. That is very doable if the corporate’s prediction that development shall be stronger within the second half of FY26 proves to be extensive of the mark.

We additionally want to contemplate the valuation. A price-to-earnings (P/E) ratio of twenty-two is extra cheap than it was. Nonetheless, it’s nonetheless removed from ‘cheap’ within the standard sense.  

Nonetheless an amazing firm

However I’ll let you know one thing: I didn’t see any indication that Auto Dealer’s dominant place is underneath any risk. It stays 10 instances bigger than its nearest competitor. That’s a powerful financial moat if I ever noticed one!

Look underneath the bonnet and there’s additionally nonetheless loads to love. Working margins and returns on capital employed (basically, what an organization will get out from the cash it places in) each stay staggeringly excessive. They’ve been that approach for years. And this helps to clarify why the corporate has vastly outperformed the FTSE 100 since itemizing in 2015.

This is the reason taking a long-term method to holding shares is so Silly.

Time to step in?

For full transparency, I as soon as held a slice of Auto Dealer in my Shares and Shares ISA. I appear to recollect making some good cash when promoting up however expertise has since taught me that I used to be possible snatching at revenue. I might in all probability have finished higher to remain put.

Making an allowance for this week’s sell-off, I’m contemplating shopping for again in subsequent month. If we then see an additional sell-off, I’m backing up the truck!