I think ARB has one of the best management teams on the ASX, and is an excellent brand, but valuation has always been the sticking point for me. Despite the recent drop, I'm still ot sure that it's great value.. but I need to do some work before having a strong opinion on that.

I don't think for a second that there is anything fundamentally wrong here, and am viewing the recent decline in earnings as a temporary soft patch driven by macro headwinds and factory overhead recoveries rather than a structural issue.

It is interesting to see the incredible US result given all the tariff fears, although of course it's mainly driven by their expansion efforts. Just a good reminder that you have to look past those first order factors.

I'll also give a shout out to the balance sheet, which is still pristine..$59m cash and zero debt, which makes them near bullet proof.

Anyway, selfishly wouldn't find more of a drop, but at the same time its probably a stock you don't want to be too fussy with in terms of price

I'm with you both on valuation. As you've alluded to @Strawman I think it may be one of those ones that only ever presents good value when looked at retrospectively. Warren Buffett had Benjamin Graham sitting on one shoulder telling him the only thing that matters is the price vs the valuation, and Charlie Munger on the other shoulder nudging him to pay up for quality (WB did both very well, probably part of why he's been so good). For me ARB is a "buy a wonderful company at a fair price" quality, type of play. But what is a fair price? Now we're back to valuation, everything is a circe. It's well understood that when talking about the whole market, more money has been lost waiting for the correction, than in the corrections themselves. I wonder if that only applies to whole markets, or individual stocks too?

I'm beginning to understand that one of my weaknesses as a stock picker is that I don't mind over paying, I'm hoping my patience once I hold makes up for that, but time will tell.

On the EV thing @Rick my gut feel is the EV take up will accelerate and take over, but ARB customers will lag significantly. EV's are on par or beat ICE cars on just about everything but towing and range, the two big considerations for most ARB car owners. I think it will be a factor, but it's many years away. EV's still need suspension upgrades, bull bars and roofracks too, so it'll be less about the technology, more about whether the technology changes behaviour and the way people travel and go off-road.

Let me start off by saying that I agree that I think ARB is an exceptionally run company which focuses on delivering quality products. I think that some of the decline is due to the incentives in the market that shift buyers from diesel products towards electric alternates, which may be inadvertently pushing them away from the traditional ARB products.

Here's a look at some of the YOY sales for the typical end users of ARB products, from the top 10 vehicles in Australia:

ARB have pivoted and now have parts available for the BYD Sealion (13,410 vehicles in 2025), so there is a potential for them to claw back some of the drop in volumes for the Ford Ranger over the next year.

There are other factors at play as well (i.e. DMax increasing their base price by 10%/$3,500), which doesn't paint the whole picture. More care sales over the next year will work out if there is starting to be more of a shift towards BYD and other vehicles that do not offer ARB add-ons.

I agree with Rick that the PE is high and the ROE has been reducing over the past few years. I sold my ARB shares in 2023 when the Covid Crazy in the car market started to show signs of dissipating. I am keen to hold this company again at some point, but right now I don't have the confidence to dip my toe in the water again just yet. Will be monitoring the situation to see if this is just a short term blip in their quite successful journey.

@Lewis The Motley Fool shared a note from Morgans today. They are still positive on ARB and have maintained their accumulate rating and a $32 price target.

https://www.fool.com.au/2026/01/22/what-is-morgans-saying-about-arb-and-bhp-shares/

Morgans remains positive on ARB. It believes that FY 2026 will be a base year for earnings and highlights that several tailwinds are supportive of growth in the coming years.

Morgans has an accumulate rating and $32.00 price target on its shares. It said:

1H26 underlying PBT of A$58m (~16% below pcp; ~14% below cons) reflected softer group sales and margin pressure (AUD/THB weakness and lower factory recoveries), with a pronounced 2Q deterioration (group sales -5.8%). All divisions weakened through the period, with implied Aftermarket sales -4.4% in 2Q26 (vs -1.7% in 2Q25); OEM -43% (vs -2%); and Export flat (vs +20.4%). The softness within the Aftermarket division is somewhat understandable, given the sharp deterioration in our tracked ARB new vehicle sales index through November (-14.8%) and December (-6.8%), dragging 2Q FY26 volumes 6.7% lower vs the pcp. However, the slowing rate of growth within Export is a point of concern (flat in 2Q) as ARB will cycle a more demanding comp in 2H FY26 (2H FY25 A$142m; vs A$125.4m 1H26).

We expect FY26 earnings will reflect a 'base' year for ARB to reset margins and resume a more sustainable growth trajectory (MorgansF FY25-28F EPS CAGR +7%). We are encouraged by ongoing US strength (1H26 +26%); a commanding balance sheet position (A$59.4m net cash); and various tailwinds supporting Aftermarket division recovery through CY26 (new OEM launches; network growth/upgrades; and eCommerce launch). Accumulate maintained.

Not Held

@Rick, I saw that too. I'm torn between being pleased because I love confirmation bias as much as the next person, and disappointed because being the contrarian feels clever. It nets out to not pulling on my opinions too hard in either direction.

Moving forward I'm keeping an eye on new car sales in the Aussie market. Most auto makers ran out during COVID due to a combo of supply chain/delivery issues, and a rush to go out and purchase anything that wasn't nailed down by cashed up, stressed and bored punters. After COVID Toyota then bought out new models in their Prado and Landcruiser models which always backs up delivery (the Prado wait list got to around 12 months then they stopped taking deposits and registered eoi's only). Toyota have said recently they're back to pre-COVID wait times on new vehicles for the first time. I have 3 general ideas on what may happen 1, key vehicle sales recover then grow, and the ARB sales return and grow likewise. 2, key vehicle sales return but there has been some customer behavior change and the ARB sales don't follow. 3, key vehicle sales continue to drop, signaling some trend away from 4x4, in this case it doesn't matter what ARB does, they're Kodak or Blockbuster in this scenario.

My guess is nothing drastic has changed and scenario 1 plays out, the valuation still has to be right for that to be a good investment, but plenty has been said on that already.