Why is everyone buying Eagers Automotive shares today?

Eagers Automotive Ltd (ASX: APE) shares are rallying higher in Monday lunchtime trade.

At the time of writing, the automotive company's shares are up around 8% and changing hands at $20.02 each.

The spike is great news for investors, as the company has faced several headwinds this year, sending its share price tumbling.

The shares are still down around 19% year to date and 36% below their 12-month trading levels.

Why is everyone flocking to Eagers Automotive shares today?

The company posted an ASX announcement ahead of the market open this morning.

Eagers Automotive said it has entered into a binding, unconditional agreement to acquire the remaining 20% ownership interest in the BYD Retail Joint Venture entity, EV Dealer Group Pty Ltd, for a combination of cash consideration and Eagers Automotive ordinary shares. 

This transaction will see EV Dealer Group become a wholly owned subsidiary of Eagers Automotive Limited.

The transaction is expected to be completed by the 31st October 2026 and represents a 5.0% to 5.5% earnings accretive for Eagers Automotive shareholders based on the pro-forma underlying operating profit before tax for the 12 months ended 30 June 2026. 

The news follows a strong half-year FY26 result out of the company in late August. 

Highlights include a 24% increase in revenue compared to the same period last year, a 23% increase in statutory NPAT, and a 23% increase in underlying EBITDA.

Eagers Automotive entered the Canadian market earlier this year by acquiring a 65% stake in CanadaOne Auto Group, which made an immediate positive impact on group results and expanded the company's international footprint. 

The group also signed a non-binding agreement in the first half of the year to divest its franchised automotive business in New Zealand—retaining the easyauto123 operations—to redeploy capital into other growth initiatives.

Are the shares a buy, sell or hold now?

It looks like we'll see more tailwinds ahead for Eagers Automotive shares this year.

The excerpts are very bullish about the outlook for the stock. Market Index data shows all brokers have a strong buy rating on the shares. The $26.70 average target price implies an upside of around 35% over the next 12 months, at the time of writing.

TradingView data shows that some analysts are even more optimistic about how high the shares can climb. Out of 15 analysts, 10 have a buy/strong buy rating. The average $26.31 target price implies a potential 32% upside ahead. However, the maximum $30 target price implies a potential 50% upside at the time of writing.

The post Why is everyone buying Eagers Automotive shares today? appeared first on The Motley Fool Australia.

Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Eagers Automotive Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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