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Asbury (ABG)
NYSE:ABG
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Asbury
(NYSE:ABG)
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Rating:62Neutral
Price Target:
$237.00
▲(8.55% Upside)
Action:ReiteratedDate:02/10/26
The score is driven primarily by healthy (but cyclical) fundamentals—strong scale, improved 2025 profitability, and solid cash generation—tempered by leverage and margin normalization. Valuation is supportive with a low P/E, but technical indicators remain bearish with the stock trading below key moving averages and negative MACD. Earnings call commentary was net-positive on cash flow, divestitures, and a de-leveraging plan, while flagging near-term cost and demand headwinds.
Positive Factors
Scale & diversified revenue base
Record quarterly revenue of $4.8B reflects Asbury's large dealer network and diversified sales streams. Scale improves access to inventory, manufacturer relationships and financing partners, producing durable revenue resilience and bargaining power through normal auto-cycle variability.
Recurring parts & service growth
Same-store parts and service gross profit growth (7%) and customer-pay strength (8%) point to higher-margin, recurring revenue. This service-driven cash flow cushions cyclical new/used vehicle swings and supports margin stability and predictability over the medium term.
Active portfolio optimization & capital allocation
Management is optimizing the portfolio (divesting lower-fit stores) while using proceeds for deleveraging and buybacks. This disciplined capital allocation improves long-term balance sheet flexibility and returns, and signals governance focus on structural profitability improvements.
Negative Factors
Elevated leverage
A debt-to-equity of 1.54 indicates relatively high leverage for an auto retailer exposed to cyclical demand. Elevated debt increases interest and refinancing risk, reducing financial flexibility to absorb downturns or fund strategic investments over the coming quarters.
Weakening free cash flow conversion
A decline in FCF growth (-7.11%) and low OCF-to-net-income (0.26) suggest slower cash conversion of earnings. That constrains deleveraging, capital expenditures and shareholder returns, and prolongs the time needed to materially improve balance sheet metrics.
Used-vehicle softness and macro headwinds
Used unit volumes were down (reported -4%), and management flagged affordability and labor-market pressures. Softness in used-vehicle demand and macro headwinds can persist for months, pressuring high-margin used sales and overall profitability in a cyclical retail business.
Asbury (ABG) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.23B
Dividend YieldN/A
Average Volume (3M)199.23K
Price to Earnings (P/E)8.7
Beta (1Y)1.09
Revenue Growth8.07%
EPS Growth60.95%
CountryUS
Employees15,000
SectorConsumer Cyclical
Sector Strength84
IndustryAuto - Dealerships
Share Statistics
EPS (TTM)6.67
Shares Outstanding19,257,920
10 Day Avg. Volume195,159
30 Day Avg. Volume199,234
Financial Highlights & Ratios
PEG Ratio0.54
Price to Book (P/B)1.16
Price to Sales (P/S)0.25
P/FCF Ratio7.82
Enterprise Value/Market Cap2.42
Enterprise Value/Revenue0.57
Enterprise Value/Gross Profit3.36
Enterprise Value/Ebitda10.02
Forecast
1Y Price Target
$231.67Price Target Upside6.11% Upside
Rating ConsensusHold
Number of Analyst Covering4
EPS Forecast (FY)26.87
Revenue Forecast (FY)$19.25B
Asbury Business Overview & Revenue Model
Company DescriptionAsbury Automotive Group, Inc., together with its subsidiaries, operates as an automotive retailer in the United States. It offers a range of automotive products and services, including new and used vehicles; and vehicle repair and maintenance services, replacement parts, and collision repair services. The company also provides finance and insurance products, including arranging vehicle financing through third parties; and aftermarket products, such as extended service contracts, guaranteed asset protection debt cancellation, prepaid maintenance, and credit life and disability insurance. As of December 31, 2021, the company owned and operated 205 new vehicle franchises representing 31 brands of automobiles at 155 dealership locations; and 35 collision centers in the United States. Asbury Automotive Group, Inc. was founded in 1996 and is headquartered in Duluth, Georgia.
How the Company Makes MoneyAsbury generates revenue primarily through the sale of new and used vehicles, which constitutes a significant portion of its income. The company earns additional revenue from its finance and insurance (F&I) operations, where it offers vehicle financing options and insurance products to customers. Asbury also profits from its service and parts departments, which provide maintenance and repair services. Key partnerships with automotive manufacturers and financial institutions further enhance its revenue streams, allowing the company to offer competitive financing options and access to exclusive vehicle inventory. Overall, Asbury's diversified approach in the automotive sector, along with its strategic dealership network, contributes substantially to its earnings.
Asbury Earnings Call Summary
Earnings Call Date:Feb 05, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 28, 2026
Earnings Call Sentiment Positive
The call highlighted multiple operational and financial strengths: record Q4 revenue and gross profit, improved used vehicle profitability, strong cash flow generation, progress on strategic divestitures, de-leveraging to 3.2x, ongoing share repurchases, and demonstrable early benefits from the Techeon DMS rollout. Offsetting these positives were near-term headwinds including a 6% decline in same-store new vehicle revenue, higher SG&A as a percent of gross profit (up 162 bps), implementation and dual-DMS duplication costs in early 2026, noncash impairments and TCA deferral impacts, and temporary softness in customer-pay spend for parts & service. On balance the company presented disciplined capital allocation, improving portfolio composition and runway to reduce leverage while acknowledging short-term transition and market challenges.Q4-2025 Updates
Positive Updates
Record Fourth-Quarter Revenue and Gross Profit
Generated record Q4 revenue of $4.7 billion and record Q4 gross profit of $793 million. Gross profit margin expanded 31 basis points to 17%. Delivered adjusted operating margin of 5.4% and adjusted EBITDA of $250 million.
Strong Adjusted EPS and Adjusted Net Income
Reported adjusted EPS of $6.67 for the quarter (would have been $6.98 excluding a $0.31 per-share TCA deferral impact) and adjusted net income of $109 million for Q4.
Improved Used Vehicle Profitability
Total used gross profit rose 6% year-over-year; used retail gross profit per unit (PVR) increased 18% to $1,749 (a $271 increase vs. prior year and $198 vs. Q3 2025). Same-store used days’ supply (DSI) was 35 days.
Portfolio Management and Divestitures
Acquired $2.9 billion in revenue during the year while executing strategic divestitures. Divested four stores in Q4 generating an estimated $150 million of annualized revenue and targeting nine additional divestitures by end of Q1 (13 transactions representing ~$750 million of annualized revenue) to reduce leverage and free cash for strategic uses.
Leverage and Liquidity Position
Transaction-adjusted net leverage finished the year at 3.2x (better than the prior forecast of 3.5x). Ended year with $927 million of liquidity comprised of floorplan offsets, credit facility availability, and cash (excluding cash TCA).
Cash Flow and Capital Allocation
Generated $651 million of adjusted operating cash flow and $465 million of adjusted free cash flow for 2025. Deployed $186 million of CapEx in 2025 and repurchased $50 million of shares in Q4 ($100 million for the full year); management expects to continue repurchases subject to share price, leverage, and acquisition opportunities.
Progress on DMS Rollout (Techeon)
Continued Techeon rollout: ended the year with 38 stores on new DMS and added additional stores (46 stores reported in January, representing >25% of portfolio). Early-adopter stores show tangible efficiency and productivity improvements.
Parts & Service Momentum
All-store parts & service revenue grew 12% year-over-year to a record $658 million in Q4. Same-store parts & service gross profit increased 2% YoY and generated a gross profit margin of 58.1% (up 13 basis points). Management believes long-term TAM is attractive given vehicle age and complexity.
Negative Updates
New Vehicle Revenue and Volume Pressure
Same-store new vehicle revenue declined 6% year-over-year (against a SAAR contraction of ~5%). Management noted a tough prior-year post-election comparable and market disruptions in some DC markets; expects near-term headwinds and a bumpy first half of 2026.
Compression in New Vehicle Profitability and SG&A
New vehicle PVRs are normalizing; same-store adjusted SG&A as a percentage of gross profit rose 162 basis points year-over-year reflecting lower new vehicle profitability. Management warned of near-term dual DMS costs and implementation expense pressures.
Customer Pay Weakness in Parts & Service
Observed a pullback in consumer spending on parts & service (notably October-November) with customer-pay growth weaker than expected; management said traffic was generally OK but dollars spent per ticket dipped in that period.
Implementation and Transition Costs (Techeon / Dual DMS)
Techeon rollout generates implementation and SOX-related costs (Q4 included $5 million of Techeon implementation expenses). Running dual DMSs during rollout will create duplicated costs in early 2026 and will pressure both reported and adjusted SG&A in the first half.
Noncash Impairments and One-Time Items
Q4 adjusted results excluded $87 million of net-of-tax noncash asset impairments, $3 million of noncash fixed asset write-offs, and $26 million net gain on divestitures. These non-operational items reduced GAAP results and indicate some asset revaluations.
TCA Noncash Deferral Headwind
Total Care Auto (TCA) created a noncash deferral headwind of $0.31 per share in Q4 ($8 million pre-tax negative deferral) and required continued modeling adjustments; rollout and accounting effects remain a near-term headwind.
High Transaction Prices and Affordability Pressure
Average new vehicle transaction price exceeded $52,000 in the quarter, creating affordability pressures that can compress margins as finance concessions are used to consummate deals.
Used Volume Constrained and EV Slowdown
Used volumes remained supply-constrained despite improved PVRs and higher average used unit cost (average used car cost > $30,000). EV sales decelerated (company EV mix fell from ~5% in 2024 to ~2% in 2025) with pockets of excess EV inventory in certain markets (e.g., Colorado).
Company Guidance
The company guided to a steadying of profitability and disciplined capital allocation while completing key technology and portfolio actions: Q4 results included $4.7B revenue, $793M gross profit (17%, +31 bps), adjusted operating margin 5.4%, adjusted EBITDA $250M, adjusted net income $109M and adjusted EPS $6.67 ($6.98 ex‑TCA $0.31 deferral); TCA generated $12M pretax and a $8M noncash deferral in Q4. Management reiterated a long‑run new‑vehicle PVR of $2,500–$3,000 (current new avg $3,135), reported used retail PVR $1,749 (+18% YoY), total front‑end yield per vehicle $4,897, used DSI 35 days, new day supply 49 days, F&I PVR $2,335 ($2,440 ex‑TCA), parts & service margin 58.1% (+13 bps) and same‑store adjusted SG&A at 4.1% of gross profit (up 162 bps). Capital allocation and balance‑sheet targets include 2025 CapEx $186M, projected CapEx ~$250M in both 2026 and 2027, 2025 adjusted operating cash flow $651M, adjusted free cash flow $465M, year‑end liquidity $927M, transaction‑adjusted net leverage 3.2x (vs. prior forecast 3.5x) with a goal to get below 3.0x by summer/YE 2026, divestitures (4 stores this quarter, ~$150M annualized revenue, nine more closing in Q1 to help reach 13 deals representing ~$750M annualized), and continued share repurchases ($50M Q4, $100M full year) with pace tied to share price and leverage. Techeon rollout is underway (≈46 stores, >25% of portfolio, ~125 stores remain, completion by Q3), with expected duplicated DMS costs in H1 and net SG&A/efficiency benefits in H2 and beyond.Asbury Financial Statement Overview
Summary
Strong multi-year revenue expansion and a notable 2025 earnings rebound with solid operating/free cash flow. Offsetting factors are margin normalization versus 2021–2022 and a still-leveraged balance sheet that increases cyclicality risk.Income Statement
Revenue has expanded materially over the last several years (from ~$7.1B in 2020 to ~$18.0B in 2025 annual), with positive growth in 2024–2025 after a modest decline in 2023. Profitability, however, has cooled versus peak levels: gross margin stepped down from ~20.1% (2022) to ~16.6% (2025), and net margin fell to ~3.7% in 2025 from ~6.5% in 2022. Despite the margin pressure, 2025 earnings rebounded strongly versus 2024 (net income ~$662M vs ~$430M) and operating profit improved, indicating the business is still generating solid profits but with more cyclical/competitive margin risk than in prior years.72
Positive
Balance Sheet
Leverage remains a key constraint: total debt is high at ~$5.6B (2025) and debt is ~1.44x equity (improving from ~1.69x in 2023 and ~2.61x in 2020). Equity has grown meaningfully (to ~$3.9B in 2025 from ~$0.9B in 2020), which supports balance-sheet resilience. That said, leverage is still elevated for a cyclical auto-dealership model, leaving the company more exposed if demand weakens or margins compress further.58
Neutral
Cash Flow
Cash generation is positive with operating cash flow of ~$775M in 2025 and free cash flow also ~$775M, up sharply from 2024 free cash flow (~$363M). Cash flow has been volatile across years (notably weaker in 2023), which is common in dealership models given working-capital swings. A watch item is that operating cash flow covers only ~0.22x of total debt in 2025 (and similar in 2024), implying debt paydown capacity relies on sustained cash generation over multiple years rather than rapid deleveraging.66
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 18.00B | 17.19B | 14.80B | 15.43B | 9.84B |
| Gross Profit | 2.99B | 2.95B | 2.76B | 3.10B | 1.90B |
| EBITDA | 1.02B | 919.30M | 1.03B | 1.55B | 841.70M |
| Net Income | 492.00M | 430.30M | 602.50M | 997.30M | 532.40M |
Balance Sheet | |||||
| Total Assets | 11.77B | 10.34B | 10.16B | 8.02B | 8.00B |
| Cash, Cash Equivalents and Short-Term Investments | 40.90M | 83.80M | 51.90M | 240.70M | 189.90M |
| Total Debt | 6.33B | 5.28B | 5.48B | 3.69B | 4.56B |
| Total Liabilities | 7.88B | 6.83B | 6.92B | 5.12B | 5.89B |
| Stockholders Equity | 3.89B | 3.50B | 3.24B | 2.90B | 2.12B |
Cash Flow | |||||
| Free Cash Flow | 576.60M | 363.00M | 170.70M | 588.10M | 1.08B |
| Operating Cash Flow | 781.90M | 671.20M | 313.00M | 696.00M | 1.16B |
| Investing Cash Flow | -1.46B | -137.20M | -1.68B | 464.70M | -3.92B |
| Financing Cash Flow | 646.30M | -510.30M | 1.18B | -1.10B | 2.93B |
Asbury Technical Analysis
Negative
218.33
Price Trends
237.13
Negative
236.27
Negative
238.21
Negative
Market Momentum
-4.98
Positive
36.72
Neutral
13.36
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ABG, the sentiment is Negative. The current price of 218.33 is below the 20-day moving average (MA) of 228.88, below the 50-day MA of 237.13, and below the 200-day MA of 238.21, indicating a bearish trend. The MACD of -4.98 indicates Positive momentum. The RSI at 36.72 is Neutral, neither overbought nor oversold. The STOCH value of 13.36 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ABG.
Asbury Risk Analysis
Asbury disclosed 28 risk factors in its most recent earnings report. Asbury reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Asbury Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | $10.66B | 11.45 | 16.56% | 3.14% | 2.25% | 8.92% | |
62 Neutral | $4.23B | 8.66 | 13.31% | ― | 8.07% | 60.95% | |
62 Neutral | $4.00B | 13.34 | 11.10% | 0.49% | 19.45% | -24.27% | |
62 Neutral | $6.87B | 8.79 | 12.34% | 0.64% | 8.56% | 17.84% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
58 Neutral | $6.88B | 11.52 | 27.05% | ― | 6.06% | -1.71% | |
56 Neutral | $2.15B | 18.37 | 12.51% | 2.27% | 9.09% | -33.59% |
* Consumer Cyclical Sector Average
ABG
Asbury
218.33
-50.07
-18.65%
AN
AutoNation
196.63
14.26
7.82%
GPI
Group 1 Automotive
334.38
-123.09
-26.91%
LAD
Lithia Motors
281.46
-60.48
-17.69%
PAG
Penske Automotive Group
157.70
-5.65
-3.46%
SAH
Sonic Automotive
63.43
-3.31
-4.96%
Asbury Corporate Events
Business Operations and StrategyExecutive/Board ChangesShareholder Meetings
Asbury Lowers Special Meeting Threshold Amid Board Refresh
Positive
Feb 4, 2026
On January 29, 2026, Asbury’s board appointed American Securities partner Christopher DiSantis as an independent director effective March 1, 2026, giving him seats on the audit and compensation committees and expanding the board to eleven members, while long-serving director Philip Maritz disclosed he will not seek re-election at the 2026 annual meeting after nearly 24 years of service. The board simultaneously amended its bylaws to lower the shareholder threshold for calling special meetings from 50% to 25% and clarified procedural requirements, signaling a more accessible governance framework as the company refreshes board leadership.
The most recent analyst rating on (ABG) stock is a Hold with a $271.00 price target. To see the full list of analyst forecasts on Asbury stock, see the ABG Stock Forecast page.
Business Operations and StrategyExecutive/Board Changes
Asbury Announces CEO Transition to Executive Chairman
Neutral
Dec 8, 2025
On December 8, 2025, Asbury Automotive Group announced that David W. Hult will transition from President and CEO to Executive Chairman following the 2026 Annual Meeting of Stockholders. This transition involves an amendment to his employment agreement, outlining his new compensation and responsibilities. Concurrently, Daniel E. Clara, the current COO, will assume the roles of President and CEO, with plans to nominate him to the Board. These leadership changes are expected to impact the company’s strategic direction and governance structure.
The most recent analyst rating on (ABG) stock is a Hold with a $230.00 price target. To see the full list of analyst forecasts on Asbury stock, see the ABG Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.