Analyst Note| David Whiston, CFA, CPA, CFE |
Asbury started 2021 with a record first quarter. Adjusted diluted EPS of $4.68 beat the Refinitiv consensus of $3.63 and grew significantly from $1.80 in first quarter 2020 thanks to an easy comparable with the pandemic starting in March 2020 and also due to the Park Place acquisition. We are leaving our fair value estimate in place but may increase it slightly later this year if results continue to be at the dramatically high level they were in first-quarter 2021. Operating margin of 6.1%, up 180 basis points, is a level that public dealers could likely never have reached before the pandemic enabled an acceleration to digital and large permanent overhead cost cuts, but we don’t see current levels as sustainable long term to merit increasing our midcycle operating margin including floorplan interest of 4.5%.