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CVNA vs. ABG: Which Auto Retailer Should You Park in Your Portfolio?
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Key Takeaways
CVNA posted 46% retail sales growth and recorded $488M adjusted EBITDA with 11.5% margins last quarter.
ABG's Clicklane digital platform sold 51K+ units in 2024, up 13% year over year, supporting its online push.
ABG faces SG&A pressure and $250M annual capex, which weigh on margins and near-term free cash flow.
Carvana Inc. (CVNA - Free Report) and Asbury Automotive (ABG - Free Report) both sell cars, but they take different approaches. Carvana has carved out a name for itself as a digital disruptor, offering a fully online used-car buying experience with flashy vending machines and nationwide delivery. Meanwhile, Asbury sticks closer to the traditional dealership model. Nonetheless, through its Clicklane digital platform, ABG is blending bricks-and-mortar strength with growing digital reach. Further, Asbury deals in both new and used vehicles, unlike Carvana, which sells only used vehicles.
As the auto retail sector navigates economic uncertainty, shifting consumer preferences and ongoing inventory challenges, investors may be wondering if they should bet on Carvana’s tech-driven rebound or Asbury’s diversified business model.
Let’s compare the fundamentals, business strategies, and market positioning of both players to see which stock could steer your portfolio in the right direction.
The Case for CVNA
Carvana is the second-largest used car retailer in the United States, driven by its fully digital platform. With no need for a vast dealership network, Carvana operates leaner than traditional auto retailers, giving it the flexibility to adapt quickly to changing market dynamics. Its eye-catching car vending machines serve as brand-building icons, with most of the buying journey happening entirely online.
Over the past year, Carvana has made major strides in operational performance. The company has topped earnings expectations for four straight quarters. It has consistently sold over 100,000 vehicles per quarter. In the last reported quarter, EPS more than doubled year over year, while retail unit sales jumped 46%. Management expects the strong momentum to continue through 2025.
Much of this progress stems from a sharp focus on efficiency. Carvana has trimmed logistics and reconditioning costs, right-sized staffing, and deployed proprietary tech to better manage inventory. These efforts have paid off—adjusted EBITDA hit a record $488 million with margins rising to 11.5%. In fact, CVNA now leads all auto retailers in terms of adjusted EBITDA margin by a wide margin. The next most profitable competitor posted an EBITDA margin of just around 7%. Carvana’s gross profit per unit also improved 8% to $6,938 in the last reported quarter, reflecting strong pricing power and operational discipline.
Rising tariffs on new vehicles could also tilt the scales in Carvana’s favor. As new car prices climb, more buyers may turn to used vehicles—an area where Carvana is well-positioned to capture demand.
The main red flag remains its balance sheet. With more than $5 billion in long-term debt, financial leverage is a concern. Still, for growth-focused investors, Carvana’s scalable model and long-term goal of selling 3 million units annually with a 13.5% EBITDA margin offer a compelling narrative.
Take a look at the consensus EPS estimates for Carvana below.
Image Source: Zacks Investment Research
The Case for ABG
Asbury blends the traditional dealership model with a growing digital footprint. The company sells a wide range of new and used vehicles and generates additional revenues from finance and insurance (F&I) products, as well as repair and maintenance services. This diversified model supports stable top-line growth.
Asbury’s Clicklane platform—its end-to-end e-commerce solution—continues to gain traction. In 2024, more than 51,000 units were sold through Clicklane, up 13% year over year, highlighting increasing customer adoption. The company is also rolling out Tekion’s Automotive Retail Cloud across its network, with early pilots showing improved productivity and customer experience. Once fully integrated, Tekion could drive operational efficiency and support long-term margin expansion.
Strategic acquisitions remain a key part of ABG’s growth playbook. Notable buyouts include Larry H. Miller Dealerships, Total Care Auto (TCA) and Jim Koons Automotive—each expanding the company’s geographic reach or business verticals. The latest acquisition of The Herb Chambers Companies is expected to add another $3 billion in annualized revenues, further enhancing scale.
However, Asbury faces some near-term headwinds. Deferred revenues from TCA’s model continue to weigh on Asbury’s earnings. The rollout of TCA products in Florida and on the Koons platform will impact results, with deferral pressure peaking in 2026 before easing.
SG&A as a percentage of gross profit has also climbed, reaching 63.9% in the last reported quarter, and is projected to remain in the mid-60s for the year—pressuring profitability. Notably, ABG’s adjusted EBITDA margin is lower than 6%, roughly half of Carvana’s level. Additionally, elevated capital spending plans of $250 million annually through 2026 could limit free cash flow.
Asbury’s expansion and digital efforts are notable, but ongoing SG&A pressures and high capex commitments may limit near-term upside. Take a look at the consensus EPS estimates for Asbury below.
Image Source: Zacks Investment Research
Price Performance and Valuation of CVNA & ABG
Year to date, Carvana shares have rallied more than 70%, while Asbury stock has gained 7%.
Image Source: Zacks Investment Research
Carvana is trading at a forward sales multiple of 3.67, quite above its median of 1.95X, over the last five years. ABG’s forward sales multiple sits at 0.27. Carvana may seem pricey but its valuations also reflect its high growth expectations and improving profitability.
Image Source: Zacks Investment Research
Bottom Line
Both Carvana and Asbury offer unique value in the evolving auto retail space. Asbury boasts a diversified business model and disciplined acquisition strategy, making it a stable player. However, rising SG&A costs, deferred revenue headwinds, and high capex could limit near-term upside, warranting a more cautious stance. ABG carries a Zacks Rank #3 (Hold).
Carvana, on the other hand, has transformed from a high-burn disruptor to a profitability leader. Its streamlined digital model, expanding margins and strong unit growth signal a business that’s scaling fast—and attracting renewed investor confidence. While the debt load remains a risk, its momentum and market positioning make it hard to ignore. CVNA carries a Zacks Rank #2 (Buy). All in all, Carvana looks like the more compelling bet right now.
Image: Bigstock
CVNA vs. ABG: Which Auto Retailer Should You Park in Your Portfolio?
Key Takeaways
Carvana Inc. (CVNA - Free Report) and Asbury Automotive (ABG - Free Report) both sell cars, but they take different approaches. Carvana has carved out a name for itself as a digital disruptor, offering a fully online used-car buying experience with flashy vending machines and nationwide delivery. Meanwhile, Asbury sticks closer to the traditional dealership model. Nonetheless, through its Clicklane digital platform, ABG is blending bricks-and-mortar strength with growing digital reach. Further, Asbury deals in both new and used vehicles, unlike Carvana, which sells only used vehicles.
As the auto retail sector navigates economic uncertainty, shifting consumer preferences and ongoing inventory challenges, investors may be wondering if they should bet on Carvana’s tech-driven rebound or Asbury’s diversified business model.
Let’s compare the fundamentals, business strategies, and market positioning of both players to see which stock could steer your portfolio in the right direction.
The Case for CVNA
Carvana is the second-largest used car retailer in the United States, driven by its fully digital platform. With no need for a vast dealership network, Carvana operates leaner than traditional auto retailers, giving it the flexibility to adapt quickly to changing market dynamics. Its eye-catching car vending machines serve as brand-building icons, with most of the buying journey happening entirely online.
Over the past year, Carvana has made major strides in operational performance. The company has topped earnings expectations for four straight quarters. It has consistently sold over 100,000 vehicles per quarter. In the last reported quarter, EPS more than doubled year over year, while retail unit sales jumped 46%. Management expects the strong momentum to continue through 2025.
Much of this progress stems from a sharp focus on efficiency. Carvana has trimmed logistics and reconditioning costs, right-sized staffing, and deployed proprietary tech to better manage inventory. These efforts have paid off—adjusted EBITDA hit a record $488 million with margins rising to 11.5%. In fact, CVNA now leads all auto retailers in terms of adjusted EBITDA margin by a wide margin. The next most profitable competitor posted an EBITDA margin of just around 7%. Carvana’s gross profit per unit also improved 8% to $6,938 in the last reported quarter, reflecting strong pricing power and operational discipline.
Rising tariffs on new vehicles could also tilt the scales in Carvana’s favor. As new car prices climb, more buyers may turn to used vehicles—an area where Carvana is well-positioned to capture demand.
The main red flag remains its balance sheet. With more than $5 billion in long-term debt, financial leverage is a concern. Still, for growth-focused investors, Carvana’s scalable model and long-term goal of selling 3 million units annually with a 13.5% EBITDA margin offer a compelling narrative.
Take a look at the consensus EPS estimates for Carvana below.
The Case for ABG
Asbury blends the traditional dealership model with a growing digital footprint. The company sells a wide range of new and used vehicles and generates additional revenues from finance and insurance (F&I) products, as well as repair and maintenance services. This diversified model supports stable top-line growth.
Asbury’s Clicklane platform—its end-to-end e-commerce solution—continues to gain traction. In 2024, more than 51,000 units were sold through Clicklane, up 13% year over year, highlighting increasing customer adoption. The company is also rolling out Tekion’s Automotive Retail Cloud across its network, with early pilots showing improved productivity and customer experience. Once fully integrated, Tekion could drive operational efficiency and support long-term margin expansion.
Strategic acquisitions remain a key part of ABG’s growth playbook. Notable buyouts include Larry H. Miller Dealerships, Total Care Auto (TCA) and Jim Koons Automotive—each expanding the company’s geographic reach or business verticals. The latest acquisition of The Herb Chambers Companies is expected to add another $3 billion in annualized revenues, further enhancing scale.
However, Asbury faces some near-term headwinds. Deferred revenues from TCA’s model continue to weigh on Asbury’s earnings. The rollout of TCA products in Florida and on the Koons platform will impact results, with deferral pressure peaking in 2026 before easing.
SG&A as a percentage of gross profit has also climbed, reaching 63.9% in the last reported quarter, and is projected to remain in the mid-60s for the year—pressuring profitability. Notably, ABG’s adjusted EBITDA margin is lower than 6%, roughly half of Carvana’s level. Additionally, elevated capital spending plans of $250 million annually through 2026 could limit free cash flow.
Asbury’s expansion and digital efforts are notable, but ongoing SG&A pressures and high capex commitments may limit near-term upside. Take a look at the consensus EPS estimates for Asbury below.
Price Performance and Valuation of CVNA & ABG
Year to date, Carvana shares have rallied more than 70%, while Asbury stock has gained 7%.
Carvana is trading at a forward sales multiple of 3.67, quite above its median of 1.95X, over the last five years. ABG’s forward sales multiple sits at 0.27. Carvana may seem pricey but its valuations also reflect its high growth expectations and improving profitability.
Bottom Line
Both Carvana and Asbury offer unique value in the evolving auto retail space. Asbury boasts a diversified business model and disciplined acquisition strategy, making it a stable player. However, rising SG&A costs, deferred revenue headwinds, and high capex could limit near-term upside, warranting a more cautious stance. ABG carries a Zacks Rank #3 (Hold).
Carvana, on the other hand, has transformed from a high-burn disruptor to a profitability leader. Its streamlined digital model, expanding margins and strong unit growth signal a business that’s scaling fast—and attracting renewed investor confidence. While the debt load remains a risk, its momentum and market positioning make it hard to ignore. CVNA carries a Zacks Rank #2 (Buy). All in all, Carvana looks like the more compelling bet right now.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.