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Asbury Automotive Group (ABG - Free Report) is cashing in on the strong consumer demand for autos during the pandemic. This Zacks Rank #1 (Strong Buy) is expected to grow revenues 32% this year.
Asbury Automotive is one of the largest automotive retailers in the United States with 101 dealerships and 25 collision repair centers. It sells and services 31 different brands of American, European and Asian automobiles.
Acquiring Stevinson Motors in Colorado
On Dec 7, Asbury announced it was buying Stevinson Automotive, which generates about $715 million in annual revenues.
Stevinson has 8 new vehicle dealerships in the Denver market, including 2 Lexus, 2 Toyota, 1 Porsche, 1 Chevrolet, 1 Hyundai, 1 Jaguar plus 1 Land Rover open point.
Stevinson has 600 plus team members.
Terms of the deal were not disclosed.
Another Beat in the Third Quarter
On Oct 26, Asbury Automotive reported its third quarter results and blew by the Zacks Consensus for the 8th quarter in a row.
Earnings were $7.36, easily beating the Zacks Consensus of $6.48.
It was a record quarter as revenue rose 30% to $2.4 billion. On a same-store basis, revenue rose 16% from last year.
Gross margin rose 180 basis points to 20%.
New vehicle volume rose on 1% due to the constraints on new inventory because of the semiconductor shortage. But used vehicle volume rose 36%.
It also announced the acquisition of the Larry H. Miller Dealerships and Total Care Auto, Powered by Landcar, with annualized revenues of about $5.7 billion.
In 2021, it expects to close on acquisitions totaling $6.6 billion in annualized revenue. It's transformational and part of the company's strategic 5-year plan.
Analysts Raise Earnings Estimates for 2021 and 2022
The analysts are bullish about Asbury. 5 analysts have raised their 2021 estimates over the last 60 days.
This has pushed up the Zacks Consensus Estimate to $25.58 from $24.25. That's earnings growth of 98% over last year where the company made just $12.90.
They are also bullish about next year.
The 2022 Zacks Consensus has soared to $28.96 from $23.31 in the last 2 months, as 4 analysts revised their estimates higher.
That's another 13% earnings growth.
Shares Are Cheap
Shares of Asbury Automotive are up 52% over the last 2 years but have gained just 15.9% in 2021 and trail the S&P 500 this year.
Image Source: Zacks Investment Research
But shares are now dirt cheap. Asbury trades with a forward P/E of just 6.8 and a PEG of 0.4.
A PEG under 1.0 usually indicates a company has both value and growth. It's a rare combination.
The demand for automobiles doesn't appear to be slowing any time soon.
For investors looking for a value stock with double digit growth, Asbury Automotive is one to keep on the short list.
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Bull of the Day: Asbury Automotive (ABG)
Asbury Automotive Group (ABG - Free Report) is cashing in on the strong consumer demand for autos during the pandemic. This Zacks Rank #1 (Strong Buy) is expected to grow revenues 32% this year.
Asbury Automotive is one of the largest automotive retailers in the United States with 101 dealerships and 25 collision repair centers. It sells and services 31 different brands of American, European and Asian automobiles.
Acquiring Stevinson Motors in Colorado
On Dec 7, Asbury announced it was buying Stevinson Automotive, which generates about $715 million in annual revenues.
Stevinson has 8 new vehicle dealerships in the Denver market, including 2 Lexus, 2 Toyota, 1 Porsche, 1 Chevrolet, 1 Hyundai, 1 Jaguar plus 1 Land Rover open point.
Stevinson has 600 plus team members.
Terms of the deal were not disclosed.
Another Beat in the Third Quarter
On Oct 26, Asbury Automotive reported its third quarter results and blew by the Zacks Consensus for the 8th quarter in a row.
Earnings were $7.36, easily beating the Zacks Consensus of $6.48.
It was a record quarter as revenue rose 30% to $2.4 billion. On a same-store basis, revenue rose 16% from last year.
Gross margin rose 180 basis points to 20%.
New vehicle volume rose on 1% due to the constraints on new inventory because of the semiconductor shortage. But used vehicle volume rose 36%.
It also announced the acquisition of the Larry H. Miller Dealerships and Total Care Auto, Powered by Landcar, with annualized revenues of about $5.7 billion.
In 2021, it expects to close on acquisitions totaling $6.6 billion in annualized revenue. It's transformational and part of the company's strategic 5-year plan.
Analysts Raise Earnings Estimates for 2021 and 2022
The analysts are bullish about Asbury. 5 analysts have raised their 2021 estimates over the last 60 days.
This has pushed up the Zacks Consensus Estimate to $25.58 from $24.25. That's earnings growth of 98% over last year where the company made just $12.90.
They are also bullish about next year.
The 2022 Zacks Consensus has soared to $28.96 from $23.31 in the last 2 months, as 4 analysts revised their estimates higher.
That's another 13% earnings growth.
Shares Are Cheap
Shares of Asbury Automotive are up 52% over the last 2 years but have gained just 15.9% in 2021 and trail the S&P 500 this year.
But shares are now dirt cheap. Asbury trades with a forward P/E of just 6.8 and a PEG of 0.4.
A PEG under 1.0 usually indicates a company has both value and growth. It's a rare combination.
The demand for automobiles doesn't appear to be slowing any time soon.
For investors looking for a value stock with double digit growth, Asbury Automotive is one to keep on the short list.