Pinned straw:
A hodgepodge collection of charts and thoughts on ARB. Full disclosure, I own it and also have the investing "P Plates" on, so I know just enough to be dangerous. Do your own research as always.
(I'm not sure if it's a good way to do it but all 2026 numbers are the 1st half results x2)
For me ARB has existed in three modes. From beginning until 2020 is was a steady, reliable compound growth machine. 2021 bought a big step up in revenue, margin and earnings. Then 2021 until present has seen slow/flat revenue growth, with a draw back on margin and earnings. You have to zoom out a fair bit to see that story, but it's a very different looking company depending on how far out you zoom.
-Recent share price has loosely followed margin. The big questions for me are; is the margin dropping a sign of something wrong under the hood, a return to normal post a COVID/money printing boom, or customer behaviour changing?
The below screen grabs are pretty back of the napkin stuff, data pulled from Commsec, old company reports from the asx site and more recently from the ARB investor page. I built it with no intention of sharing it, I don't think there are errors with the scaling or numbers, but double check it by all means.
REVENUE:
NET PROFIT:
My framing is that it's a reliable compounder that's returning to normal after a few wild years. I think margin is back to where it was pre 2021 (give or take). They've managed to hold onto most of the 2021 big step up in revenue, haven't sacrificed too much WRT margin, and have nailed the landing on USA expansion. All in a fairly unfriendly world with tariffs, inflation, politics and currency all over the place.
Market sales sectors haven't changed much, a slight move towards less reliance on the Australian market but not drastic.
That's me, looking at the last 5 years it's going backwards, looking at the last 20 years it's bottom left, top right. Which trend will win out, and is it finally cheap enough to buy into the slow and steady growth if the 20 year trend continues?
Love your work @Lewis. Nice graphs that make things very easy to visualise. I was holding ARB at various times in FY21 and FY22 and it was clear that they actually got a boost from Covid-19, as people realised that the pandemic was dragging on and new variants were emerging. Various worksites shutting down or requiring work-from-home plus the public gathering restrictions and lock-downs in various states had people buying vehicles that they could use to get away, to camp, fish, holiday in, whatever, and owners were spending more money on their 4WD vehicles to kit them out even more and make them more self-sufficient and durable for extended periods away from our main population centres and services.
Many investors may not have expected a mean reversion to occur as things returned to normal post-the-worst-of-Covid, in terms of ARB's sales, profits and margins, but we did get one in the past couple of years, so I reckon the question is: Will their margins stop falling soon, or even potentially rise, or is the margin erosion likely to continue?
Often with these types of businesses, we can look at the future demand dynamics and the competitive landscape, etc., and ask questions like: Has this business and its core market matured? Are they running out of viable growth options?
An argument could be mounted that ARB is a mature business here in Australia, but are not in the USA and many other parts of the world in which they also operate.
However, while I know from talking to 4WD owners here that prefer to buy their gear from ARB, that it is because of the quality and durability of the gear and the high levels of service at ARB by experienced 4WD owners who work there, I know very little about the competitive landscape in 4WD accessories in the USA and other countries in which ARB operate. And I think that's worth exploring because most of ARB's growth from here is likely to come from overseas, not from Australia.