One-glance verdict
Undervalued
$390.02 our estimate vs market $215.00
Wall Street consensus: $254.20 (-34.8% lower than our fair-value estimate)
45% below our estimate, below the bear case
Fundamentals snapshot
Asbury Automotive Group, Inc.
ABG · NYQ · Consumer Cyclical · Auto & Truck Dealerships
Current price
$215.00
52-week range
$172.01 - $262.67
Market cap
$3.86B
Balance sheet
Stretched
3.59x Stretched
Net debt $5.48B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
3 Risks
3 rewards · 3 risks
- Reward Returns 13.2% on equity, ahead of 33% of its peers.
- Reward Free cash flow was positive in 4/10 years.
- Risk Net debt grew 75.8% over 3 years.
- Risk Operating margin compressed from 8.2% to 5.1% over 3 years.
What this company does
Asbury Automotive Group, Inc.
Asbury Automotive Group is a large car dealership company that sells new and used vehicles across the United States. A significant part of their profit also comes from high-margin services (meaning a large portion of the price is profit), such as vehicle repairs, financing, and insurance sold alongside the cars. This matters because the steady demand for repairs and services helps provide a more consistent stream of income, even when car sales fluctuate with the economy.
How the company got here
Asbury Automotive Group was started in 1995 with the idea of buying up and running groups of local car dealerships. It began by purchasing well-known dealership groups in places like Atlanta, St. Louis, and Texas. The company went public on the stock market in 2002, which allowed it to raise money to grow even more. A major turning point was its 2021 purchase of Larry H. Miller Dealerships for $3.2 billion, which greatly expanded its size and also brought in a business that sells vehicle protection plans. This and other large acquisitions, like Jim Koons Automotive in 2023, have made Asbury one of the largest car retailers in the United States.
What it actually does
Asbury is one of the biggest operators of car dealerships in the U.S. Think of them as the owner of many different local car lots you might drive by, selling popular brands like Honda, Ford, BMW, and many others. Beyond just selling new and used cars, they also provide the services most people need after buying a car. This includes auto repair, maintenance like oil changes, selling replacement parts, and running collision centers for accident repairs. They also help customers get car loans and sell extra products like extended warranties.
Dealerships
This is Asbury's main business and makes up the vast majority of its revenue. This segment includes everything related to the physical car lots, from selling brand new vehicles from over 30 different car brands to offering a wide selection of used cars. Customers also pay this part of the business for maintenance and repair services, often called 'fixed operations,' which is a steady source of income. The dealerships also earn money by arranging car loans and selling finance and insurance (F&I) products, which are add-ons like extended service contracts.
Total Care Auto, Powered by Asbury (TCA)
This is a smaller but important part of the company that Asbury acquired in 2021. TCA doesn't sell cars; instead, it provides vehicle protection plans and service contracts that customers can buy for their cars. These are essentially insurance-like products that cover the cost of certain repairs after the manufacturer's warranty (the initial guarantee from the carmaker) expires. This business is profitable because it collects fees from many customers for these plans, which helps Asbury earn more money from each car buyer over time.
What management is betting on now
Asbury's main strategy is to keep growing by buying more dealership groups in attractive, high-growth markets across the U.S. They are also focused on what they call an 'omni-channel' experience, which means making it easy for customers to shop both online through their Clicklane platform and in person at the dealership. Another key priority is to increase the sale of higher-margin (more profitable) services. This includes growing their parts and service business and selling more vehicle protection plans from their Total Care Auto segment to customers at all of their dealerships.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
Revenue
$4.38B
Net income
$114.60M
Diluted EPS
6.25
Operating cash flow
$129.40M
Free cash flow
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Revenue
$4.11B
Net income
$187.80M
Diluted EPS
9.87
Operating cash flow
$223.20M
Free cash flow
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Revenue
$4.68B
Net income
$60.00M
Diluted EPS
3.14
Operating cash flow
$151.90M
Free cash flow
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Revenue
$4.80B
Net income
$147.10M
Diluted EPS
7.52
Operating cash flow
$306.90M
Free cash flow
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Revenue
$4.37B
Net income
$152.80M
Diluted EPS
7.76
Operating cash flow
$91.40M
Free cash flow
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Revenue
$4.15B
Net income
$132.10M
Diluted EPS
6.71
Operating cash flow
$225.00M
Free cash flow
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Revenue
$4.50B
Net income
$128.80M
Diluted EPS
6.53
Operating cash flow
$244.20M
Free cash flow
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Revenue
$4.24B
Net income
$126.30M
Diluted EPS
6.37
Operating cash flow
$404.30M
Free cash flow
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Is it cheap or expensive?
Fair value $390.02 vs current price $215.00
Wall Street consensus is the average analyst price target: $254.20 (-34.8% lower than our fair-value estimate).
Our most-likely fair value is $390.02 a share — about 81.4% above today's price of $215.00, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Stretched
Net debt $5.5B. Interest coverage 3.6x.
Net debt
$5.48B
Interest coverage
3.59x
Asbury Automotive Group, Inc.'s profit covers its interest bill about 3.6 times over. which is stronger than most peers shown here.
Stretched
Worse cushion
Baseline
Better cushion
ABG
BASELINE
Asbury Automotive Group, Inc.
Total debt $5.53B Interest coverage 3.59x This is the baseline the peer rows are being compared against.
Total debt $5.78B Interest coverage 3.36x -7% vs ABG Has roughly the same debt cushion as ABG.
Total debt $4.67B Interest coverage 2.86x -20% vs ABG Carries about 1.3x less debt cushion than ABG.
Total debt $11.33B Interest coverage 2.94x -18% vs ABG Carries about 1.2x less debt cushion than ABG.
Total debt $16.56B Interest coverage 1.83x -49% vs ABG Carries about 2.0x less debt cushion than ABG.
Total debt $9.37B Interest coverage 4.88x +36% vs ABG Carries about 1.4x more debt cushion than ABG.
What you should know
The case for and against ABG
3 Rewards
3 Risks
Rewards
-
Returns 13.2% on equity, ahead of 33% of its peers.
-
Free cash flow was positive in 4/10 years.
-
Trades at 8.0x P/E vs peer median 12.4x (35.5% cheaper).
Risks
-
Net debt grew 75.8% over 3 years.
-
Operating margin compressed from 8.2% to 5.1% over 3 years.
-
Insider ownership is only 0.8% (peer median: 2.4%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
8.00x
Forward P/E
7.10x
P/B
0.98x
P/S
0.21x
EV/EBITDA
9.11x
PEG ratio
0.61x
Profitability
How much profit each dollar creates
Gross margin
17.1%
Operating margin
5.1%
Net margin
2.8%
ROE
13.2%
ROA
5.4%
Health
Liquidity and balance-sheet strength
Debt / equity
1.41x
Current ratio
0.91x
Quick ratio
0.14x
Total debt
$5.53B
Total cash
$50.30M
Growth
How the business has been compounding
Revenue TTM
$17.98B
Revenue 5Y CAGR
16.3%
EPS TTM
26.86
EPS 5Y CAGR
-17.4%
Cash flow
How much cash the business throws off
Operating CF TTM
$811.40M
Free CF TTM
$569.90M
FCF margin
3.2%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
2008-07-30