Asbury Earnings: Strong Revenue and Service Growth Keeps Overhead Costs in Good Shape Among Dealers

Asbury Automotive Group finished 2024 with record fourth-quarter revenue and adjusted diluted earnings per share of $7.26, up 2% year over year, surpassing the $6.04 LSEG consensus, sending the stock up 11.5% on Jan. 30. We are not changing our fair value estimate but will review all modeling assumptions when we roll our model for the 10-K. Same-store revenue rose 6%, with all segments growing except used vehicle retail. Same-store adjusted overhead costs as a percentage of gross profit rose by 109 basis points but remains at a good low level at 62%. Total same-store gross profit only rose 2% on declines in both new and used vehicles, which hurt expense leverage, however, service gross profit increased 11%. Higher recall business helped the warranty gross profit grow 26%, but customer pay increased by 13%, which means good off-warranty retention. Management cited Stellantis inventory as holding back profit from being even better. The automaker is 8% of new vehicle revenue, and CEO David Hult said many of the firm’s franchises nationwide had the wrong inventory and had to excessively discount.