Core Viewpoint - The article emphasizes the importance of value investing and highlights Asbury Automotive Group (ABG) and Group 1 Automotive (GPI) as strong value stocks based on their financial metrics and rankings [2][8]. Company Analysis: Asbury Automotive Group (ABG) - ABG has a Zacks Rank of 2 (Buy) and an A for Value, indicating strong potential for value investors [3]. - The company's price-to-book (P/B) ratio is 1.39, which is lower than the industry average of 2.29, suggesting it may be undervalued [4]. - ABG's P/CF ratio stands at 9.88, which is attractive compared to the industry's average of 10.07, further indicating potential undervaluation [5]. - Over the past year, ABG's P/B has fluctuated between 1.26 and 1.63, with a median of 1.38 [4]. - The P/CF ratio has ranged from 5.88 to 11.08, with a median of 8.71 [5]. Company Analysis: Group 1 Automotive (GPI) - GPI also holds a Zacks Rank of 2 (Buy) and has a Value score of A, making it another attractive option for value investors [6]. - The Forward P/E ratio for GPI is 10.40, while the PEG ratio is 2.05, compared to industry averages of 8.27 and 1.38 respectively [6]. - GPI's price-to-earnings (P/E) ratio has varied from 6.51 to 10.99, with a median of 7.99 over the past year [7]. - The P/B ratio for GPI is 1.88, which is also below the industry average of 2.29, indicating potential undervaluation [7]. Conclusion - Both Asbury Automotive Group and Group 1 Automotive are highlighted as likely undervalued stocks based on their financial metrics and earnings outlook, making them appealing options for value investors [8].

Core Viewpoint - The Zacks Auto Retail and Wholesale industry is facing challenges due to declining profit per unit and high vehicle financing costs, despite stable demand for vehicles. Companies like Lithia Motors, Group 1 Automotive, and Asbury Automotive are expanding their digital and physical presence to adapt to these challenges [1]. Industry Overview - The automotive sector's performance is heavily reliant on retail and wholesale networks, including dealerships and retail chains that sell vehicles and provide related services. Economic conditions significantly influence consumer spending on big-ticket items, with the pandemic accelerating the shift towards e-commerce [2]. Factors Influencing Industry Prospects - Anticipated decline in internal combustion engine (ICE) vehicle sales is expected, with projections indicating that ICE vehicles will account for only 75% of total sales volume by 2025, leading to potential price reductions and margin pressures for dealers holding ICE inventories [3]. - Affordability challenges persist as high-interest rates deter customers from vehicle purchases. Despite recent interest rate cuts by the Federal Reserve, rates remain significantly higher than pre-pandemic levels, which may continue to impact the auto retail industry [4]. Expanding Market Presence - Auto dealers are strategically acquiring new markets to enhance their market share and profitability. The focus on digital presence is also helping them reach a broader customer base [5]. Zacks Industry Rank - The Zacks Auto Retail & Wholesale industry currently holds a rank of 177, placing it in the bottom 29% of approximately 250 Zacks industries, indicating dim near-term prospects [6][7]. Earnings Outlook - The industry's earnings estimates for 2025 have declined by 30.80% over the past year, reflecting a negative outlook from analysts regarding earnings growth potential [8]. Stock Market Performance - The Zacks Auto Retail & Wholesale industry has underperformed compared to the S&P 500 and the broader Auto, Tires, and Truck sector, with a return of 8.7% over the past year, while the sector and S&P 500 grew by 26.2% and 26.9%, respectively [10][11]. Current Valuation - The industry is currently trading at an EV/EBITDA ratio of 8.39X, significantly lower than the S&P 500's 18.67X and the sector's 22X, indicating a valuation discount [14]. Company Highlights - **Lithia Motors, Inc. (LAD)**: A leading automotive retailer with a diversified product mix and multiple income streams, positioned for long-term growth. The company expects 2025 sales and EPS growth of 8.08% and 17.74%, respectively, with a recent EPS estimate increase of $0.97 [19]. - **Group 1 Automotive, Inc. (GPI)**: A major automotive retailer with a diversified portfolio, anticipating 2025 sales and EPS growth of 11.33% and 5.27%, respectively, with a recent EPS estimate increase of $0.25 [24]. - **Asbury Automotive Group, Inc. (ABG)**: One of the largest automotive retailers, leveraging its Clicklane e-commerce platform for online transactions. The company expects 2025 sales and EPS growth of 2.70% and 7.23%, respectively [28].

A month has gone by since the last earnings report for Asbury Automotive Group (ABG) . Shares have added about 11.6% in that time frame, outperforming the S&P 500. Will the recent positive trend continue leading up to its next earnings release, or is Asbury Automotive due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts. Asbury's Q3 Earnings Miss Estima ...

Here are three stocks added to the Zacks Rank #5 (Strong Sell) List today:Akebia Therapeutics, Inc. (AKBA) is a biopharmaceutical company. The Zacks Consensus Estimate for its current year earnings has been revised 26.3% downward over the last 60 days.Asbury Automotive Group, Inc. (ABG) is an automotive retailer. The Zacks Consensus Estimate for its current year earnings has been revised 6.7% downward over the last 60 days.Clean Harbors, Inc. (CLH) is an environmental and industrial services provider. The Z ...

Here are three stocks added to the Zacks Rank #5 (Strong Sell) List today:América Móvil, S.A.B. de C.V. (AMX) is a telecommunications services provider. The Zacks Consensus Estimate for its current year earnings has been revised 10.1% downward over the last 60 days.Antero Midstream Corporation (AM) is a midstream energy company. The Zacks Consensus Estimate for its current year earnings has been revised 8.8% downward over the last 60 days.Asbury Automotive Group, Inc. (ABG) is an automotive retail company.T ...

Here are three stocks added to the Zacks Rank #5 (Strong Sell) List today:A. O. Smith Corporation (AOS) is a water heater and treatment equipment company. The Zacks Consensus Estimate for its current year earnings has been revised 7.1% downward over the last 60 days.agilon health, inc. (AGL) is a healthcare services provider. The Zacks Consensus Estimate for its current year earnings has been revised 18% downward over the last 60 days.Asbury Automotive Group, Inc. (ABG) is a car dealership company.The Zacks ...

Here are three stocks added to the Zacks Rank #24 (Strong Sell) List today:Alerus Financial Corporation (ALRS) is the bank holding company for Alerus Financial, National Association. The Zacks Consensus Estimate for its current year earnings has been 20.5% downward over the last 60 days.Asbury Automotive Group, Inc. (ABG) is an automotive retailer. The Zacks Consensus Estimate for its current year earnings has been revised 5.4% downward over the last 60 days.Clean Harbors, Inc. (CLH) is a provider of enviro ...

Shares of Asbury Automotive Group (NYSE: ABG ) have been a moderate performer, gaining about 16% over the past year, given strong profits but declining margins. I last covered shares in May , rating shares a strong buy. SinceOver fifteen years of experience making contrarian bets based on my macro view and stock-specific turnaround stories to garner outsized returns with a favorable risk/reward profile. If you want me to cover a specific stock or have a question for an article, just let me know!Analyst’s Di ...

Asbury Automotive (ABG) reported third-quarter 2024 adjusted earnings of $6.35 per share, which decreased 21.8% year over year and missed the Zacks Consensus Estimate of $6.65. In the reported quarter, revenues amounted to $4.24 billion, which increased 16% year over year but missed the Zacks Consensus Estimate of $4.36 billion.Stay up-to-date with the quarterly releases: See Zacks Earnings Calendar.Segment DetailsIn the quarter, new vehicle revenues rose 16% year over year to $2.16 billion, missing the Zac ...

Revenue and Profitability - Consolidated revenue for the nine months ended September 30, 2024, was $12.68 billion, compared to $10.99 billion for the prior year, reflecting a significant increase [122]. - Consolidated gross profit for the nine months ended September 30, 2024, was $2.20 billion, compared to $2.08 billion for the prior year, indicating a slight growth in profitability [122]. - The increase in revenue and gross profit is primarily attributed to the acquisition of the Jim Koons Dealerships, which included 20 new vehicle dealerships and six collision centers [121][124]. - Total revenue for the third quarter of 2024 increased by $570.5 million (16%) to $4,236.7 million compared to $3,666.2 million in the same period of 2023 [128]. - New vehicle revenue rose by $301.6 million (16%) to $2,163.5 million, while used vehicle revenue also increased by $183.0 million (16%) to $1,294.7 million [128]. - Gross profit increased by $44.5 million (7%) to $718.0 million, driven by a $46.0 million (16%) increase in parts and service gross profit [128]. - Total revenue for the nine months ended September 30, 2024, increased by $1,693.1 million (15%) compared to the same period in 2023, driven by a $820.4 million (15%) increase in new vehicle revenue and a $614.1 million (18%) increase in used vehicle revenue [164]. - Gross profit for the nine months ended September 30, 2024, increased by $116.0 million (6%), primarily due to a $145.9 million (17%) increase in parts and service gross profit [164]. Expenses and Income - Income from operations decreased by $32.1 million (12%) to $232.7 million, primarily due to a $74.8 million (19%) increase in selling, general, and administrative expenses [129]. - Total other expenses, net increased by $24.2 million (63%) to $63.0 million, largely due to a $22.3 million increase in floor plan interest expense [130]. - Net income decreased by $42.9 million (25%) to $126.3 million, with net income per diluted share falling to $6.37 from $8.19 [130]. - Selling, general, and administrative (SG&A) expenses increased by $208.3 million (17%) during the nine months ended September 30, 2024, contributing to a decrease in income from operations by $233.0 million (28%) compared to the prior year [165]. - Floor plan interest expense increased by $64.7 million, resulting in total other expenses, net, rising by $89.1 million (86%) for the nine months ended September 30, 2024 [166]. - Net income decreased by $245.5 million (45%) during the nine months ended September 30, 2024, compared to the same period in 2023, with income before income taxes decreasing by $322.1 million (44%) to $403.6 million [166]. Vehicle Sales and Inventory - The company operates 202 new vehicle franchises and 37 collision centers across 14 states as of September 30, 2024 [108]. - New vehicle units sold increased by 5,761 (16%) to 42,607 units compared to 36,846 units in the prior year [132]. - The revenue mix for new vehicles accounted for 51.1% of total revenue, up from 50.8% in 2023 [128]. - New vehicle revenue increased by $301.6 million (16%) for the three months ended September 30, 2024, driven by a $135.2 million (18%) increase in import brands revenue, a $108.5 million (21%) increase in domestic brands revenue, and a $57.9 million (10%) increase in luxury brands revenue [134]. - The company’s ability to sell vehicles has been affected by supply chain disruptions and production slowdowns, impacting inventory levels and availability [114]. - Same store new vehicle revenue decreased by $132.7 million (2%) due to a 3% decrease in new vehicle units sold [169]. Gross Profit Margins - The gross profit margin decreased to 16.9% from 18.4% year-over-year [128]. - The gross profit margin for the nine months ended September 30, 2024, was 17.3%, down from 19.0% in the prior year, reflecting declining new and used vehicle margins [164]. - The gross margin for new vehicles decreased to 7.3%, down 228 basis points from the previous year, attributed to easing inventory constraints [170]. - Used vehicle retail gross profit margins decreased from 6.4% to 5.1% for all stores and from 6.4% to 5.2% on a same store basis compared to the prior year [174]. Parts and Service Revenue - Parts and service revenue increased by $66.6 million (13%) to $593.1 million, driven by an $47.9 million (18%) increase in customer pay revenue and a $15.8 million (22%) increase in warranty revenue [145]. - Total parts and service gross profit rose by $46.0 million (16%) to $337.1 million, with same store gross profit increasing by $10.6 million (4%) to $298.1 million [146]. - Total parts and service revenue increased by $196.1 million (13%) to $1.76 billion, primarily due to a $137.0 million (17%) increase in customer pay revenue [177]. - Total parts and service gross profit increased by $145.9 million (17%) to $1.01 billion, with same store gross profit increasing by $36.8 million (4%) to $889.0 million [179]. Share Repurchase and Capital Expenditures - The company repurchased 826,340 shares for $182.1 million during the nine months ended September 30, 2024, as part of its capital allocation strategy [122]. - Capital expenditures, excluding real estate purchases, were $104.5 million for the nine months ended September 30, 2024, up from $76.5 million in 2023 [208]. - The company expects capital expenditures for 2024 to total approximately $180.0 - $200.0 million for facility upgrades, new constructions, and technology investments [214]. Tax and Liquidity - The effective tax rate for the three months ended September 30, 2024, was 25.6%, compared to 25.1% in the prior year, with an estimated effective tax rate for the year ending December 31, 2024, at 25.4% [159]. - Total available liquidity as of September 30, 2024, was $768.2 million, consisting of cash, floor plan offset accounts, and credit facility availability [193]. - The effective income tax rate for the nine months ended September 30, 2024, was 25.3%, compared to 24.6% for the same period in 2023 [191].