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Asbury Automotive Group Inc ABG

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Asbury Posts Record Second-Quarter Results on Cost-Cutting Despite the Pandemic

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.

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Company Profile

Business Description

Asbury Automotive Group is a regional collection of automobile dealerships that went public in March 2002. The company will operate about 91 stores once the Park Place acquisition closes in 2020, with associated parts and service departments. About 79% of new-vehicle revenue is from luxury and import brands. Asbury also offers third-party financing and insurance products. Asbury operates in 10 states (mostly Texas and the Southeast), and the company entered Colorado in 2019. Asbury generated $7.2 billion of revenue in 2019.

2905 Premiere Parkway North West, Suite 300
Duluth, GA, 30097
T +1 770 418-8200
Sector Consumer Cyclical
Industry Auto & Truck Dealerships
Most Recent Earnings Jun 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 8,500