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Asbury Automotive Group Inc ABG

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Asbury Starts 2021 With a Record First Quarter

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%.

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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 operates over 90 stores with associated parts and service departments and 25 collision centers. About 80% of new-vehicle revenue is from luxury and import brands. Asbury also offers third-party financing and insurance products. Asbury operates in 9 states (mostly Texas and the Southeast), and the company entered Colorado in 2019. Its store brands include David McDavid and Park Place in Texas, Plaza in Missouri, and Nalley and Crown in the southeastern U.S. Asbury generated $7.1 billion of revenue in 2020 and is based in the Atlanta area.

Contact
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 Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 7,900

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