Earnings Miss: Asbury Automotive Group, Inc. Missed EPS By 81% And Analysts Are Revising Their Forecasts

The second-quarter results for Asbury Automotive Group, Inc. (NYSE:ABG) were released last week, making it a good time to revisit its performance. It looks like a pretty bad result, all things considered. Although revenues of US$4.2b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 81% to hit US$1.39 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Asbury Automotive Group

Taking into account the latest results, the most recent consensus for Asbury Automotive Group from seven analysts is for revenues of US$17.3b in 2024. If met, it would imply a notable 8.6% increase on its revenue over the past 12 months. Per-share earnings are expected to bounce 21% to US$24.20. Before this earnings report, the analysts had been forecasting revenues of US$17.2b and earnings per share (EPS) of US$29.35 in 2024. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a real cut to EPS estimates.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$252, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Asbury Automotive Group at US$310 per share, while the most bearish prices it at US$185. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Asbury Automotive Group shareholders.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The period to the end of 2024 brings more of the same, according to the analysts, with revenue forecast to display 18% growth on an annualised basis. That is in line with its 20% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 4.8% per year. So it's pretty clear that Asbury Automotive Group is forecast to grow substantially faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Asbury Automotive Group going out to 2026, and you can see them free on our platform here..

And what about risks? Every company has them, and we've spotted 3 warning signs for Asbury Automotive Group (of which 1 is a bit unpleasant!) you should know about.

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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.