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Asbury Automotive Group Inc ABG

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Asbury's Second Quarter Is an All-Time Record as Chip Shortage Yields Excellent Pricing Power

Analyst Note

| David Whiston, CFA, CPA, CFE |

Asbury Automotive reported all-time record quarterly results with adjusted diluted EPS of $7.78 beating the Refinitiv consensus of $5.09. We are raising our fair value estimate to $207 from $181. The change is from time value of money, a lower cost of debt, an increase in revenue over our five-year forecast period, and better overhead cost leveraging than previously modeled in light of how 2021 is progressing. We model total revenue across 2021-25 of $70.8 billion, 6.6% higher than in our previous model. This change reflects higher growth in all areas of the company and a slight increase in our forecast U.S. industry new light vehicle sales for each of 2021-24. We now expect 2021 sales about in the mid-16 million range compared with low 16 million previously. We now model Asbury exceeding its $20 billion revenue in 2025 target, with revenue that year of $20.7 billion. We are assuming the semiconductor shortage starts to improve in the third quarter, but we don’t see it ending this year.

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Company Profile

Business Description

Asbury Automotive Group is a regional collection of automobile dealerships that went public in March 2002. The company operates over 90 stores with associated parts and service departments and 25 collision centers. About 80% of new-vehicle revenue is from luxury and import brands. Asbury also offers third-party financing and insurance products. Asbury operates in 9 states (mostly Texas and the Southeast), and the company entered Colorado in 2019. Its store brands include David McDavid and Park Place in Texas, Plaza in Missouri, and Nalley and Crown in the southeastern U.S. Asbury generated $7.1 billion of revenue in 2020 and is based in the Atlanta area.

Contact
2905 Premiere Parkway North West, Suite 300
Duluth, GA, 30097
T +1 770 418-8200
Sector Consumer Cyclical
Industry Auto & Truck Dealerships
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 7,900

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