One-glance verdict
Undervalued
$656.35 our estimate vs market $170.05
Wall Street consensus: $232.00 (-64.7% lower than our fair-value estimate)
74% below our estimate, below the bear case
Fundamentals snapshot
Asbury Automotive Group, Inc.
ABG · NYQ · Consumer Cyclical · Auto & Truck Dealerships
Current price
$170.05
52-week range
$160.30 - $258.75
Market cap
$3.05B
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 company that owns and runs car dealerships across the United States. While they sell new and used vehicles, a key part of their business is also offering services like vehicle repairs, financing, and insurance plans, which often have higher margins (the portion of the sale price that is pure profit). This is important because this service income is typically more consistent and predictable than car sales, which can go up and down with the overall economy.
How the company got here
Asbury Automotive Group was started in 1995 and grew by purchasing existing car dealerships, a strategy known as growing through acquisitions (buying other companies). A key turning point was its decision to become a publicly traded company in 2002, which allowed it to raise money from investors to fuel more growth. More recently, the company made two very large acquisitions, buying Larry H. Miller Dealerships in 2021 and the Koons dealership group in 2023, which significantly expanded its size and reach across the United States. These purchases helped Asbury become one of the largest car retailers in the country.
What it actually does
Asbury operates a large network of car dealerships across the United States. Think of them as the local dealership in your town, but on a much larger scale, with well-known regional names like Larry H. Miller, Koons, and Herb Chambers. They sell new cars from many different brands, as well as used cars. Beyond just selling cars, they also provide repair and maintenance services, sell car parts, and operate collision repair centers. 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 (the total money it brings in from sales). This segment includes selling brand-new vehicles from various manufacturers like Honda, Ford, and Mercedes-Benz, as well as a wide selection of used cars. This part of the company also includes the service centers that perform maintenance and repairs, and the collision centers that fix cars after an accident. When a customer buys a car, this segment also earns money by arranging financing (car loans) and selling insurance products.
Total Care Auto, Powered by Asbury (TCA)
This is a smaller but important part of the company that focuses on finance and insurance products. TCA provides and sells things like extended vehicle service contracts (often called extended warranties), prepaid maintenance plans, and other protection products for your car. While the Dealerships segment sells these products to the final customer, TCA is the business behind creating and managing them. Asbury acquired this business as part of the Larry H. Miller purchase and is now expanding its offerings across all of its dealerships.
What management is betting on now
Asbury's main focus is on growth through strategic acquisitions, meaning they are actively looking to buy more well-run dealership groups in attractive markets. They are also investing heavily in technology, rolling out a new dealership management system called Tekion to make their operations more efficient and improve the customer experience. Another key priority is expanding their high-margin (more profitable) finance and insurance business, Total Care Auto, across their entire network of stores. The company also uses an online car-buying platform called Clicklane to blend the digital shopping experience with its physical 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 $656.35 vs current price $170.05
Wall Street consensus is the average analyst price target: $232.00 (-64.7% lower than our fair-value estimate).
Our most-likely fair value is $656.35 a share — about 286.0% above today's price of $170.05, 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 $16.56B Interest coverage 1.83x -49% vs ABG Carries about 2.0x 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 $9.37B Interest coverage 4.88x +36% vs ABG Carries about 1.4x more debt cushion than ABG.
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.
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 6.4x P/E vs peer median 10.1x (36.5% 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 0.9% (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)
6.43x
Forward P/E
5.85x
P/B
0.78x
P/S
0.17x
EV/EBITDA
8.41x
PEG ratio
0.43x
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
26.44
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
0.0%
Payout ratio
0.0%
Last ex-div date
2008-07-30