Questor share tip: Inchcape races ahead Inchcape 640½p-4 Questor says HOLD Revenue accelerates Inchcape, the luxury car seller, said last week that revenue growth in the third quarter of the year had accelerated. Revenue increased by 7pc in the three months ended September compared with 4pc in the comparable period. The FTSE 250-listed car group focuses on premium brands such as Audi, BMW, Jaguar, Land Rover, Lexus and Porsche. The company generates 61pc of its revenue from selling luxury car marques and 39pc from managing the entire distribution process that involves everything from setting prices to arranging advertising campaigns in far-flung markets such as Asia and Russia. Balanced profits The car group is well diversified across international markets. In terms of trading profit 27pc comes from Asia, 23pc UK, 23pc Australasia, 20pc Russia and emerging markets, and 7pc Europe. The UK is enjoying strong growth with sales up by 13.4pc. In Asia it is a mixed picture with strong sales in Hong Kong, but Singapore's idiosyncratic car registration process held back revenue growth there. The group warned in August that new car sales were difficult in Russia and the market remains tough, but this has been offset by strong growth in Latin America. Australia remains solid despite fears over the economy. Share buy-back The company announced in August that it would spend £100m buying back and cancelling its shares to return cash to shareholders. The latest update last week said that this process was only about a quarter complete with £23.8m spent so far. Given a rough estimate of £8.3m to be spent on shares each month the buy-back is slightly ahead of schedule given the August 29 start date. However, it should provide a useful support to the share price during the next 10 months. The buy-back should also support earnings per share that could be hit by profit margin pressure as vehicle manufacturers squeeze pricing. Racing ahead Shares in Inchcape have risen 50pc in the year to date, and are up 64pc from when Questor said buy at 391.6p in October last year. The company said it was on target to meet consensus estimates for the full year of £6.54bn in revenue, £271m in pre-tax profit, giving earnings per share of 42.5p. Inchcape shares are trading on 15 times forecast earnings, falling to 13.7 times next year. That is looking expensive when compared with the long-term average at 11.9 times. The shares offer a handy dividend that has a forecast yield of 2.7pc and is expected to grow by 11pc next year. However, given profit margin pressure and tough trading in some markets they are no better than a hold.