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.