CFRA raises Asbury Automotive price target to $300, maintains Hold

Despite the strong performance and growth prospects, Nelson maintains a Hold rating on Asbury (NYSE:ABG) Automotive’s stock, citing valuation concerns. With the stock having recently outperformed, the analyst suggests that there may be more attractive investment opportunities within the auto retail sector at current price levels. This aligns with InvestingPro’s Fair Value assessment, which indicates the stock is currently overvalued. Trading at a P/E ratio of 17.03x, investors seeking detailed valuation analysis can access comprehensive Pro Research Reports, available for ABG and 1,400+ other US stocks, offering expert insights and actionable intelligence for smarter investment decisions.

The new 12-month target price, set at a 9.6x P/E ratio for 2026, represents a premium to Asbury’s historical average forward P/E of 7.9x. Nelson’s revision is partly due to an uptick in the 2025 adjusted earnings per share (EPS) estimate, now at $29.10, up from $28.65, and the introduction of a 2026 EPS estimate of $31.35.

Asbury Automotive’s fourth-quarter results surpassed expectations, with an adjusted EPS of $7.26 compared to the $7.12 in the same quarter the previous year, a 2% increase. This figure notably exceeded the consensus estimate of $6.04. The earnings beat was attributed to stronger-than-anticipated sales, with revenue climbing 18% to $4.50 billion, which was $340 million above the consensus. The company’s revenue growth trend remains strong at 12.24% over the last twelve months, though margins remain under pressure. InvestingPro subscribers have access to detailed financial health metrics and 10+ additional ProTips that provide deeper insights into ABG’s performance.

The report also highlighted the impact of Asbury’s recent acquisition of Jim Koons Auto Group on December 11, 2023. This acquisition, significant in the auto retail industry, positioned Jim Koons Auto Group as the ninth-largest privately-owned auto dealership group in the United States, contributing $2.7 billion in annual revenue, 20 dealerships, and 29 franchises to Asbury’s portfolio.

Despite the strong performance and growth prospects, Nelson maintains a Hold rating on Asbury Automotive’s stock, citing valuation concerns. With the stock having recently outperformed, the analyst suggests that there may be more attractive investment opportunities within the auto retail sector at current price levels. This aligns with InvestingPro’s Fair Value assessment, which indicates the stock is currently overvalued. Trading at a P/E ratio of 17.03x, investors seeking detailed valuation analysis can access comprehensive Pro Research Reports, available for ABG and 1,400+ other US stocks, offering expert insights and actionable intelligence for smarter investment decisions.

In other recent news, Asbury Automotive Group exceeded fourth-quarter earnings estimates, with revenues showing a solid 7% year-on-year growth. The auto retailer reported adjusted earnings per share of $7.26, surpassing the analysts’ projection of $6.08. The quarterly revenue reached $4.5 billion, exceeding the consensus estimate of $4.18 billion.

The company’s revenue growth was primarily fueled by strong demand across its dealership network, despite enduring supply chain issues in the automotive industry. Asbury’s diversified portfolio of brands and emphasis on used vehicle sales mitigated some of the new vehicle inventory constraints.

Although Asbury did not provide specific guidance for the ensuing quarters or fiscal year, the better-than-expected results suggest a positive outlook for the company moving forward. These developments underscore the recent performance and future expectations from the analysts for Asbury Automotive Group.

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