Asbury Automotive Group (ABG): Evaluating Valuation Following Record Q3 Results and Growth Momentum

Asbury Automotive Group (ABG) just posted record-breaking third quarter results, reporting its highest-ever revenue and net income. Earnings per share jumped well above last year and surpassed market expectations by a healthy margin.

See our latest analysis for Asbury Automotive Group.

Despite the headline-making quarter, Asbury Automotive Group’s share price has bounced around in recent months, with a 6.9% share price return over the past 90 days but only a modest 0.4% gain year-to-date. The recent record profits, active share buybacks, and ongoing portfolio optimization suggest momentum could be building after a relatively flat stretch. The company’s three-year total shareholder return of 53% shows the longer-term growth story remains very much alive.

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With quarterly results smashing expectations but a tepid stock performance so far this year, the real question for investors is whether Asbury is flying under the radar or if future growth is already reflected in the price.

Most Popular Narrative: 9.3% Undervalued

Compared to Asbury Automotive Group's last close price of $237.38, the most widely followed narrative assigns a fair value of $261.75, suggesting current levels may not reflect the company’s full potential. The narrative incorporates several operational catalysts and recent strategic moves that may influence future earnings and valuation.

Continued investment in digital retail via Clicklane and full rollout of the Tekion DMS are expected to drive operational efficiencies, improve employee productivity, reduce SG&A as a percent of gross profit, and increase transaction volumes. These factors may have a positive impact on margins and EBITDA over time.

Read the complete narrative.

What hidden assumptions are shaping this bullish price target? The narrative’s outlook balances large retail investments with ambitious growth forecasts and a margin play that could surprise nearly everyone. See what’s fueling this fair value debate and learn which factors must change to unlock it.

Result: Fair Value of $261.75 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, rising debt from acquisitions and ongoing supply constraints in used vehicles could present challenges for Asbury's growth and profitability outlook in the near term.

Find out about the key risks to this Asbury Automotive Group narrative.

Build Your Own Asbury Automotive Group Narrative

If this perspective doesn’t match your own or you’d rather dig into the numbers firsthand, take a few minutes to explore and shape your own view. Do it your way

A great starting point for your Asbury Automotive Group research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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