Analyst Note| David Whiston, CFA, CPA, CFE |
Asbury Automotive Group continued the trend of dealers reporting strong second quarter results thanks to much lower SG&A expense following the coronavirus. We raise our fair value estimate to $94 from $91 after modeling lower SG&A expenses for 2020-21. Adjusted diluted EPS of $2.52, up 5.9% year over year, beat the Refinitiv consensus of $2.49 while total revenue fell by 19.9% and same-store revenue fell by 18.6%. Total company new vehicle unit sales fell by 17% while used vehicle declined by 11%. All major segments’ revenue fell by deltas as large as 25% as COVID-19 yields less service and collision work and less vehicle sales means less finance deals. CEO and president David Hult teased some dramatic new offerings for the digital business, saying they are things no dealer currently has, and he expects to give detail on the third-quarter call. Hult also said the COVID resurgence is not hurting business in Texas and Florida.