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

Last updated: Last Thursday

The analysis below may be 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 / a good investment?
  • What are ABG analyst opinions, recommendations, ratings?

Here are ABG stock buy reasons/signals:

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 PEG ratio (P/E adjusted for growth) is 0.88, and it’s low compared to its industry peers’ PEG ratios.

Here are ABG stock sell reasons/signals:

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 ($73.25) is close to the 52-week high ($75.20). Perhaps now is a good time to sell?

5. ABG quarterly revenue growth was -4.80%, lower than the industry and sector average revenue growth (5.86% and 4.78%, respectively).

6. ABG profitability is declining. The YoY profit margin change was -0.01pp.

7. ABG Price/Book ratio is 3.84, and it’s high compared to its industry peers’ P/B ratios.

8. ABG average analyst price target ($60.63) is below its current price ($73.25).

9. ABG short share of float is 11.34%. The stock is much more frequently shorted than the average industry, sector or S&P 500 stock.

10. ABG short interest (days to cover the shorts) ratio is 7.35. The stock garners more short interest than the average industry, sector or S&P 500 stock.

What are your thoughts on ABG?

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