In the current market session, Asbury Automotive Group Inc. (NYSE:ABG) share price is at $242.43, after a 0.50% drop. Over the past month, the stock increased by 10.05%, but over the past year, it actually fell by 3.91%. With good short-term performance like this, and questionable long-term performance, long-term shareholders might want to start looking into the company's price-to-earnings ratio.How Does Asbury Automotive Group P/E Compare to Other Companies?The P/E ratio measures the current share price to ...

Core Insights - Asbury Automotive Group reported strong Q3 2025 earnings, with adjusted EPS of $7.17, surpassing estimates and showing a year-over-year increase from $6.35 [3] - Revenues for the quarter reached $4.80 billion, a nearly 13% increase year-over-year, exceeding the consensus estimate [3] Segment Performance - New vehicle revenues increased by 17% year-over-year to $2.53 billion, driven by higher unit sales, with retail units sold totaling 48,070, up 13% from the previous year [4] - Used vehicle retail revenues rose 7% to $1.23 billion but fell short of estimates due to lower unit sales, with retail used vehicle units sold at 37,696, up only 1% year-over-year [5] - Wholesale used vehicle revenues climbed 27% to $185.5 million, exceeding consensus estimates [6] - Finance and insurance business net revenues were $200.3 million, an 8% increase year-over-year, beating estimates [7] - Parts and service revenues reached $659.4 million, up from $593.1 million year-over-year, but missed the consensus estimate [8] Financial Metrics - Selling, general & administrative expenses as a percentage of gross profit increased to 65.7%, up 70 basis points year-over-year [9] - Cash and cash equivalents decreased to $32.2 million from $69.4 million at the end of 2024, while long-term debt rose to $3.6 billion [9] Market Outlook - Following the earnings release, there has been an upward trend in estimates for Asbury Automotive [10] - The company holds a Zacks Rank 3 (Hold), indicating expectations for an in-line return in the coming months [12] Industry Comparison - Asbury Automotive is part of the Zacks Automotive - Retail and Wholesale industry, where competitor AutoNation reported a 6.9% year-over-year revenue increase to $7.04 billion [13]

Core Insights - Zacks Premium offers various tools for investors to enhance their stock market engagement and confidence [1] - The Zacks Style Scores are designed to complement the Zacks Rank, providing additional stock ratings based on value, growth, and momentum [2][7] Zacks Style Scores - Each stock is rated from A to F based on value, growth, and momentum, with A being the highest score indicating better chances of outperforming the market [3] - The Value Score identifies attractive stocks using ratios like P/E, PEG, and Price/Sales, appealing to value investors [3] - The Growth Score focuses on a company's financial health and future outlook, analyzing projected and historical earnings and cash flow [4] - The Momentum Score capitalizes on price trends and earnings outlook changes, helping investors identify favorable times to invest [5] - The VGM Score combines value, growth, and momentum scores, aiding in the selection of stocks with the best overall potential [6] Zacks Rank - The Zacks Rank is a proprietary model that utilizes earnings estimate revisions to guide investors in building successful portfolios [7] - Stocks rated 1 (Strong Buy) have historically produced an average annual return of +23.93% since 1988, significantly outperforming the S&P 500 [8] - There are over 800 stocks rated 1 and 2, making it essential for investors to use Style Scores to narrow down choices [9] Investment Strategy - For optimal returns, investors should focus on stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B [10] - Stocks with a 3 (Hold) rank should also have A or B Scores to maximize upside potential [10] - A stock with a 4 (Sell) or 5 (Strong Sell) rating, even with high Style Scores, is likely to face declining earnings forecasts [11] Company Spotlight: Asbury Automotive Group - Asbury Automotive Group is a major automotive retailer in the U.S., operating 152 new vehicle dealerships and 37 collision repair centers [12] - Asbury holds a 3 (Hold) Zacks Rank and a VGM Score of A, with a Value Style Score of A due to a forward P/E ratio of 8.37 [13] - Recent upward revisions in earnings estimates for fiscal 2025 have increased the Zacks Consensus Estimate by $0.39 to $28.03 per share, with an average earnings surprise of +8.4% [13] - With a solid Zacks Rank and strong Value and VGM Style Scores, Asbury Automotive Group is recommended for investors' consideration [14]

Economic Overview - The year 2025 has been turbulent for the U.S. economy, marked by elevated uncertainty and job market weakness [1] Investment Approach - The investment strategy focuses on fundamental long-term perspectives, with a history of investing in REITs, preferred stocks, and high-yield bonds since high school [2] - Recent strategies include combining long stock positions with covered calls and cash secured puts [2] Analyst and Disclosure Information - There are no current stock, option, or similar derivative positions in any mentioned companies, nor plans to initiate such positions within the next 72 hours [3] - The article expresses personal opinions and is not compensated beyond the platform [3]

Group 1 - Barclays analyst John Babcock indicates investment opportunities in the automotive dealership sector due to expected profit growth in fiscal year 2026 and a recent decline in valuations [1] - The automotive retail industry is rated as "neutral," but certain companies show potential for above-average performance due to strong growth trends and resilience in adverse economic cycles [1] - Demand for used cars in the U.S. is weak, and auto credit data shows a decrease in demand in the subprime market [1] Group 2 - Companies rated "buy" include Carvana (CVNA.US) for its investment in optimizing online purchasing experience, while CarMax (KMX.US) is rated "sell" due to inconsistent operational performance and potential higher-than-expected loan loss reserves [1] - In the new and used car dealership segment, companies rated "buy" include AutoNation (AN.US), Group 1 Automotive (GPI.US), Lithia Motors (LAD.US), and Penske Automotive (PAG.US) based on strong same-store sales growth and stable operational performance [2] - Asbury Automotive (ABG.US) and Sonic Automotive (SAH.US) are rated "hold" [2]

Core Insights - Zacks Premium offers tools for investors to enhance their stock market strategies, including daily updates, research reports, and stock screens [1][9] - The Zacks Style Scores are designed to help investors select stocks with the highest potential to outperform the market in the short term [2] Zacks Style Scores Overview - The Style Scores consist of four categories: Value Score, Growth Score, Momentum Score, and VGM Score, each focusing on different investment strategies [3][4][5][6] - Value Score identifies undervalued stocks using financial ratios [3] - Growth Score assesses a company's future earnings and financial health [4] - Momentum Score capitalizes on price trends and earnings outlook changes [5] - VGM Score combines all three styles for a comprehensive evaluation [6] Zacks Rank and Performance - The Zacks Rank is a proprietary model that uses earnings estimate revisions to aid in stock selection [7] - Stocks rated 1 (Strong Buy) have historically outperformed the S&P 500, with an average annual return of +23.93% since 1988 [8] - There are over 800 top-rated stocks available, making the selection process potentially overwhelming [9] Stock Analysis: Asbury Automotive Group (ABG) - Asbury Automotive Group is a major automotive retailer in the U.S., operating 152 new vehicle dealerships and 37 collision repair centers [12] - ABG holds a 3 (Hold) rating on the Zacks Rank, with a VGM Score of A and a Value Style Score of A, indicating strong valuation metrics [13] - The forward P/E ratio for ABG is 8.08, making it attractive for value investors [13] - Recent upward revisions in earnings estimates suggest positive momentum, with the Zacks Consensus Estimate increasing by $0.37 to $27.57 per share [13] - ABG's average earnings surprise stands at +8.4%, reinforcing its potential as a solid investment choice [13][14]

Core Insights - Magnolia Group, LLC has increased its stake in Asbury Automotive Group by purchasing an additional 44,500 shares, bringing its total holdings to 282,623 shares valued at $69.09 million, which represents 10.95% of Magnolia's U.S. equity assets [1][2]. Company Overview - Asbury Automotive Group, Inc. is a U.S. automotive retailer with diversified revenue streams including vehicle sales, after-sales services, and financial products [5][7]. - The company reported a total revenue of $17.83 billion and a net income of $560.80 million for the trailing twelve months (TTM) [4]. Financial Metrics - Asbury Automotive's stock was priced at $235.89 as of October 28, 2025, with a one-year price change of 4.57% [4]. - The company's five-year revenue compound annual growth rate (CAGR) is 19%, with a forward price-to-earnings (P/E) ratio of 8.6 for FY2026 and an enterprise value to EBITDA ratio of 8.5 as of September 30, 2025 [2][4]. Recent Performance - Asbury Automotive experienced a strong Q3 revenue growth of 13% year-over-year, reaching an all-time high of $4.8 billion [8]. - Despite this growth, Asbury's stock has declined approximately 2% in 2025 through October 29, primarily due to an ongoing lawsuit from the U.S. Federal Trade Commission (FTC) regarding alleged hidden fees and racial discrimination [9][10]. Investment Position - Magnolia Group's investment in Asbury Automotive increased from 8.7% to 11% of its assets under management (AUM) in the third quarter, indicating a bullish outlook on the company [8]. - Asbury Automotive's stock is currently below its 52-week high of $312.56, which may have influenced Magnolia Group's decision to expand its position [10].

Financial Performance - Consolidated revenue for the nine months ended September 30, 2025, increased to $13.32 billion, compared to $12.68 billion for the prior year, representing a growth of approximately 5.1%[123] - Consolidated gross profit for the nine months ended September 30, 2025, increased to $2.28 billion, compared to $2.20 billion for the prior year, reflecting a growth of about 3.6%[123] - Total revenue for the three months ended September 30, 2025, increased by $564.2 million (13%) to $4,800.9 million compared to $4,236.7 million in 2024, driven by a $365.4 million (17%) increase in new vehicle revenue[128] - Gross profit for the same period increased by $84.5 million (12%) to $802.5 million, with parts and service gross profit rising by $52.0 million (15%)[128] - Net income increased by $20.8 million (16%) to $147.1 million, with diluted net income per share rising by $1.14 (18%) to $7.52[130] - Total revenue for the nine months ended September 30, 2025 increased by $638.4 million (5%) to $13,322.5 million compared to the same period in 2024[157] - New vehicle revenue rose by $578.2 million (9%) to $6,970.9 million, while used vehicle revenue decreased by $25.8 million (1%) to $3,933.8 million[157] - Gross profit for the nine months ended September 30, 2025 increased by $79.9 million (4%) to $2,278.6 million, driven by a $75.5 million (7%) increase in parts and service gross profit[157][159] Vehicle Sales and Revenue - The increase in consolidated revenue was primarily due to an increase in new vehicle units sold and parts and service volume growth, partially offset by a decrease in used vehicle units sold[123] - New vehicle revenue reached $2,528.9 million, a $365.4 million (17%) increase, with new vehicle units sold rising by 5,463 (13%)[132] - The seasonally adjusted annual rate (SAAR) for new vehicle sales in the U.S. was approximately 16.3 million, up from 15.6 million in the prior year, reflecting higher consumer demand[134] - Total new vehicle units sold increased to 134,003 for the nine months ended September 30, 2025, up from 125,963 in the same period of 2024, reflecting a growth of 8,040 units (6%)[162] - Used vehicle retail units sold increased by 1% to 37,696, while same store retail units sold decreased by 4% to 34,294[135] Expenses and Profitability - Income from operations rose by $9.9 million (4%) to $242.6 million, primarily due to the increase in gross profit, despite a $60.6 million (13%) rise in selling, general, and administrative expenses[129] - Selling, general, and administrative (SG&A) expenses increased by $60.6 million (13%) to $527.1 million for the three months ended September 30, 2025, with SG&A as a percentage of gross profit rising to 65.7%[148] - The company experienced a $11.7 million increase in asset impairment expense during the quarter[129] - Total other expenses, net decreased by $20.6 million (33%), primarily due to a $30.7 million increase in gains from dealership divestitures[130] Acquisitions and Investments - The Herb Chambers acquisition, completed on July 21, 2025, involved an aggregate purchase price of approximately $1.78 billion, comprising 33 dealerships and 52 franchises[118] - The company's operating results for the three and nine months ended September 30, 2025, include the results of the Herb Chambers Businesses, significantly impacting revenue and gross profit increases[124] - The company expects capital expenditures of approximately $175.0 million during 2025 for facility upgrades and technology investments[207] Cash Flow and Liquidity - The company’s ability to generate sufficient cash flows and maintain liquidity is critical for working capital, capital expenditures, and acquisitions[109] - Total available liquidity as of September 30, 2025, was $686.9 million, including cash and cash equivalents of $21.2 million[184] - Net cash provided by operating activities was $623.3 million for the nine months ended September 30, 2025, compared to $427.0 million for the same period in 2024[199] - Net cash used in investing activities totaled $1.49 billion for the nine months ended September 30, 2025, compared to net cash provided of $17.8 million for the same period in 2024[201] - Net cash provided by financing activities was $830.7 million for the nine months ended September 30, 2025, compared to net cash used of $430.2 million for the same period in 2024[208] Market Conditions and Future Outlook - Economic conditions, including rising inflation and interest rates, may adversely impact demand and pricing for the company's products and services[119] - The company expects lower finance and insurance (F&I) revenue and gross profit over the next few years due to changes in revenue recognition from TCA contracts[147] - The company anticipates rolling out TCA products to its Koons stores in Q4 2025 and Herb Chambers stores in 2026[147] - The company noted that consumers are keeping vehicles longer due to higher vehicle costs and interest rates, impacting service revenue trends[170] Financial Ratios and Margins - The gross profit margin for new vehicles decreased to 6.4% from 7.0%, attributed to easing inventory constraints affecting historically high margins[133] - Used vehicle retail gross profit margins increased from 5.1% to 5.2% for all stores during the nine months ended September 30, 2025, driven by higher prices for used vehicles[166] - Total parts and service gross margin improved to 58.8% from 57.3% year-over-year, reflecting better profitability in parts and service operations[171]

Core Insights - Asbury Automotive (ABG) reported Q3 2025 adjusted earnings per share of $7.17, exceeding the Zacks Consensus Estimate of $6.80 and up from $6.35 in the previous year, driven by strong gross profits from new vehicle sales, finance and insurance, and parts and service [1][9] - Total revenues for the quarter reached $4.80 billion, marking a nearly 13% year-over-year increase and surpassing the Zacks Consensus Estimate of $4.69 billion [1][9] Segment Performance - New vehicle revenues increased by 17% year over year to $2.53 billion, exceeding the Zacks Consensus Estimate of $2.44 billion, supported by a higher number of units sold, totaling 48,070 (up 13% year over year) [2] - The average selling price (ASP) for new vehicles was $52,609, up 4% year over year, also beating the consensus mark of $52,259 [2] - Gross profit from new vehicle sales was $161 million, a 7% increase from the prior year, surpassing the Zacks Consensus Estimate of $157 million [2] Used Vehicle Performance - Used vehicle retail revenues rose 7% year over year to $1.23 billion but fell short of the Zacks Consensus Estimate of $1.24 billion due to lower unit sales, totaling 37,696 (up 1% year over year) [3] - The ASP for used vehicles was $32,543, up 6% year over year, exceeding the consensus estimate of $31,576 [3] - Gross profit from used vehicles was $61.5 million, a 10% year-over-year increase, but missed the Zacks Consensus Estimate of $63 million [3] Wholesale and Finance Performance - Revenues from the used vehicle wholesale business increased by 27% to $185.5 million, beating the consensus mark of $160 million, although gross profit of $3.8 million fell short of the estimate of $4.15 million [4] - Net revenues from the finance and insurance business reached $200.3 million, an 8% increase year over year, surpassing the Zacks Consensus Estimate of $187 million [5] - Gross profit from finance and insurance was $187.1 million, up 9% year over year, exceeding the consensus estimate of $178 million [5] Parts and Service Performance - Revenues from the parts and service business were $659.4 million, up from $593.1 million in the prior year but missed the Zacks Consensus Estimate of $661 million [6] - Gross profit from this segment was $389.1 million, surpassing the consensus mark of $388 million and reflecting a 9% year-over-year increase [6] Financial Metrics - Selling, general & administrative expenses as a percentage of gross profit rose to 65.7%, an increase of 70 basis points year over year [7] - As of September 30, 2025, the company had cash and cash equivalents of $32.2 million, down from $69.4 million as of December 31, 2024, with long-term debt increasing to $3.6 billion from $3.14 billion [7]

Core Insights - Asbury Automotive Group reported a revenue of $4.8 billion for the quarter ended September 2025, reflecting a year-over-year increase of 13.3% and surpassing the Zacks Consensus Estimate by 2.37% [1] - The earnings per share (EPS) for the quarter was $7.17, up from $6.35 in the same quarter last year, exceeding the consensus EPS estimate by 5.44% [1] Financial Performance Metrics - New vehicle unit sales reached 48,070, exceeding the average estimate of 45,535 [4] - Used vehicle retail unit sales were 37,696, slightly below the average estimate of 39,323 [4] - The average selling price for new vehicles was $52.61 billion, surpassing the average estimate of $52.26 billion [4] - Same-store used vehicle retail unit sales were 34,294, above the average estimate of 33,321 [4] - Average gross profit per unit for total new vehicles was $3.35 billion, slightly above the average estimate of $3.33 billion [4] - Average gross profit per unit for used vehicle retail was $1.63 billion, exceeding the average estimate of $1.59 billion [4] Revenue Breakdown - Revenues from new vehicles totaled $2.53 billion, compared to the average estimate of $2.44 billion, marking a year-over-year increase of 16.9% [4] - Revenues from used vehicles were $1.41 billion, slightly above the average estimate of $1.4 billion, with a year-over-year increase of 9.1% [4] - Wholesale revenues from used vehicles reached $185.5 million, exceeding the average estimate of $159.86 million, representing a year-over-year change of 26.9% [4] - Finance and insurance net revenues were $200.3 million, surpassing the average estimate of $186.93 million, with a year-over-year increase of 8% [4] - Retail revenues from used vehicles were $1.23 billion, slightly below the average estimate of $1.24 billion, reflecting a year-over-year increase of 6.8% [4] - Parts and service revenues were $659.4 million, close to the average estimate of $661.34 million, with a year-over-year increase of 11.2% [4] Stock Performance - Asbury Automotive's shares have returned -2.6% over the past month, while the Zacks S&P 500 composite has increased by 3.6% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]