Asbury Automotive Group Inc (ABG) Buy or Sell Stock Guide

Last updated: Apr 12, '19

Are you looking for the analysis of Asbury Automotive Group Inc (ABG) stock? Are you wondering what the bulls and the bears say about it?

If so, you came to the right place. In this stock guide, we will share with you 7 reasons to buy and 7 reasons to sell ABG stock. You’ll get a perspective on what the bulls and the bears say about it.

The analysis below may be also helpful to you if you have any of the following questions about ABG stock:

  • Is ABG a buy or a sell?
  • Should I sell or hold ABG stock today?
  • Is ABG a good buy / investment?
  • What are ABG analyst opinions, recommendations and ratings?

Let’s start with the bull case. Here are the reasons to buy ABG stock:

1. The firm's product mix, weighted toward luxury and import brands, brings more affluent consumers to the dealership, which partially mitigates the sales decline during cyclical downturns that auto sales typically experience.

2. Auto dealerships are moaty businesses that can maintain a narrow range of operating margins regardless of economic conditions.

3. Sizable dealership companies enjoy economies of scale, albeit limited ones.

4. ABG quarterly revenue growth was 6.80%, higher than the industry and sector average revenue growth (6.51% and 4.40%, respectively). See ABG revenue growth chart.

5. ABG forward P/E ratio is 8.13, and it’s low compared to its industry peers’ P/E ratios. See ABG forward P/E ratio chart.

6. ABG Price/Sales ratio is 0.20, and it’s low compared to its industry peers’ P/S ratios. See ABG forward Price/Sales ratio chart.

7. ABG PEG ratio (P/E adjusted for growth) is 0.48, and it’s low compared to its industry peers’ PEG ratios. See ABG PEG chart.

Now that you understand the bull case, let’s look at the reasons to sell ABG stock (i.e., the bear case):

1. Customers could delay maintenance or choose a cheaper independent repair shop instead of going to the dealer for servicing an older vehicle, which would negate the technological advantage that Asbury enjoys over smaller repair shops.

2. Overpaying for acquisitions is a risk and can lead to value destruction for investors.

3. The company's Q auto stand-alone used vehicle store pilot program could prove to be a waste of time and money.

4. ABG stock price ($73.10) is close to the 52-week high ($73.63). Perhaps now is a good time to sell? See ABG price chart.

5. ABG Price/Book ratio is 2.90, and it’s high compared to its industry peers’ P/B ratios. See ABG forward Price/Book ratio chart.

6. ABG short share of float is 15.26%. The stock is much more frequently shorted than the average industry, sector or S&P 500 stock. See ABG short share of float chart.

7. ABG short interest (days to cover the shorts) ratio is 12.8. The stock garners more short interest than the average industry, sector or S&P 500 stock. See ABG short interest ratio chart.

Now let's look at the key statistics for ABG:

Metrics ABG
Price $79.00
Average Price Target / Upside $78.22 / -0.99%
Average Analyst Rating Hold
Industry Auto & Truck Dealerships
Sector Consumer Cyclical
Number of Employees 8,200
Market Cap $1.48B
Forward P/E Ratio 8.65
Price/Book Ratio 0.21
PEG 0.53
Revenue (TTM) $6.87B
YoY Quarterly Revenue Growth 6.8%
Profit Margin 2.44%

What are your thoughts on ABG?

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