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Asbury to Buy Park Palace Dealerships, Issues Q2 Updates
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Asbury Automotive Group, Inc. (ABG - Free Report) recently entered into an agreement to acquire certain Park Place Dealerships’ assets for $685 million of goodwill and about $50 million for parts, fixed assets, and leaseholds, excluding vehicle inventories. Subject to satisfactory conditions, the acquisition is scheduled to complete in the third quarter of 2020.
Deal Benefits
Asbury will purchase 12 new vehicle franchises, located in the Dallas and Fort Worth market. The acquisition includes three stores for both Mercedes-Benz and Sprinter in Dallas, Fort Worth, and Arlington, two for Lexus, and one each for Jaguar, Land Rover, Porsche, and Volvo. The Park Place auto auction and two collision centers are also included in the sale.
The deal will enhance Asbury’s portfolio and add $1.7 billion in projected annual sales. The transaction is expected to boost the company’s geographic mix to 28% of revenues derived from the Texas market, and further diversify the overall portfolio from 36% to around 49% of revenues derived from luxury brands.
By incorporating Park Place into its portfolio, the company will gain substantial synergies over the next three years. The deal is expected to result in additional EBITDA of $95 million, including at least $20 million in run-rate synergies, which are expected to be realized over the next three years. Additionally, Asbury expects annual cash tax savings of $10 million from amortization of goodwill with a present value of about $80 million.
Asbury Issues Q2 Preliminary Results
Asbury recently released the preliminary financial results for second-quarter 2020. The company’s overall results showed recoveries from the declines witnessed in the first quarter, as states continue to ease the shelter-in-place strategies and begin reopening processes, which were imposed due to the coronavirus outbreak.
Same-store new vehicle unit sales in June declined roughly 16% year over year compared with the 34% and 20% fall registered during April and May, respectively. Sales of the same-store used vehicle unit increased around 1% year over year in June compared with the 38% and 7% decline witnessed in April and May. Moreover, the company ended June with strong liquidity position of around $730 million of available liquidity, including cash, floor plan offsets, revolvers, and used vehicle lines.
Zacks Rank and Other Stocks to Consider
Asbury currently carries a Zacks Rank #2 (Buy). Shares of the company have depreciated 29.8%, year to date, compared with the industry’s decline of 17.4%.
Shares of Niu have gained 1% year to date, as against the industry’s decline of 11.7%.
Shares of LCI Industries have appreciated 6%, year to date, as against the industry’s decline of 11.7%.
Shares of AngloGold have rallied 33%, year to date, compared with the industry’s gain of 24.9%.
Zacks’ Single Best Pick to Double
From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, SherazMian hand-picks one to have the most explosive upside of all.
This young company’s gigantic growth was hidden by low-volume trading, then cut short by the coronavirus. But its digital products stand out in a region where the internet economy has tripled since 2015 and looks to triple again by 2025.
Its stock price is already starting to resume its upward arc. The sky’s the limit! And the earlier you get in, the greater your potential gain.
Image: Bigstock
Asbury to Buy Park Palace Dealerships, Issues Q2 Updates
Asbury Automotive Group, Inc. (ABG - Free Report) recently entered into an agreement to acquire certain Park Place Dealerships’ assets for $685 million of goodwill and about $50 million for parts, fixed assets, and leaseholds, excluding vehicle inventories. Subject to satisfactory conditions, the acquisition is scheduled to complete in the third quarter of 2020.
Deal Benefits
Asbury will purchase 12 new vehicle franchises, located in the Dallas and Fort Worth market. The acquisition includes three stores for both Mercedes-Benz and Sprinter in Dallas, Fort Worth, and Arlington, two for Lexus, and one each for Jaguar, Land Rover, Porsche, and Volvo. The Park Place auto auction and two collision centers are also included in the sale.
The deal will enhance Asbury’s portfolio and add $1.7 billion in projected annual sales. The transaction is expected to boost the company’s geographic mix to 28% of revenues derived from the Texas market, and further diversify the overall portfolio from 36% to around 49% of revenues derived from luxury brands.
By incorporating Park Place into its portfolio, the company will gain substantial synergies over the next three years. The deal is expected to result in additional EBITDA of $95 million, including at least $20 million in run-rate synergies, which are expected to be realized over the next three years. Additionally, Asbury expects annual cash tax savings of $10 million from amortization of goodwill with a present value of about $80 million.
Asbury Issues Q2 Preliminary Results
Asbury recently released the preliminary financial results for second-quarter 2020. The company’s overall results showed recoveries from the declines witnessed in the first quarter, as states continue to ease the shelter-in-place strategies and begin reopening processes, which were imposed due to the coronavirus outbreak.
Same-store new vehicle unit sales in June declined roughly 16% year over year compared with the 34% and 20% fall registered during April and May, respectively. Sales of the same-store used vehicle unit increased around 1% year over year in June compared with the 38% and 7% decline witnessed in April and May. Moreover, the company ended June with strong liquidity position of around $730 million of available liquidity, including cash, floor plan offsets, revolvers, and used vehicle lines.
Zacks Rank and Other Stocks to Consider
Asbury currently carries a Zacks Rank #2 (Buy). Shares of the company have depreciated 29.8%, year to date, compared with the industry’s decline of 17.4%.
Other top-ranked stocks are China Automotive Systems, Inc. (CAAS - Free Report) , LCI Industries (LCII - Free Report) and AngloGold Ashanti Limited (AU - Free Report) , each carrying a Zack Rank of 2 at present. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Shares of Niu have gained 1% year to date, as against the industry’s decline of 11.7%.
Shares of LCI Industries have appreciated 6%, year to date, as against the industry’s decline of 11.7%.
Shares of AngloGold have rallied 33%, year to date, compared with the industry’s gain of 24.9%.
Zacks’ Single Best Pick to Double
From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, SherazMian hand-picks one to have the most explosive upside of all.
This young company’s gigantic growth was hidden by low-volume trading, then cut short by the coronavirus. But its digital products stand out in a region where the internet economy has tripled since 2015 and looks to triple again by 2025.
Its stock price is already starting to resume its upward arc. The sky’s the limit! And the earlier you get in, the greater your potential gain.
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