Asbury Automotive Group Q4 Margin Compression Tests Bullish Earnings Growth Narrative

Asbury Automotive Group (ABG) closed out FY 2025 with Q4 revenue of US$4.7b, basic EPS of US$3.11 and net income of US$60m, alongside trailing twelve month revenue of US$18.0b and basic EPS of US$25.23. Over recent quarters the company has seen revenue move from US$4.5b in Q4 2024 to US$4.7b in Q4 2025. In the same period, quarterly EPS shifted from US$6.57 to US$3.11 as net income went from US$128.8m to US$60m. This has set up a results season where investors are weighing steady top line scale against tighter earnings and what that implies for margins.

See our full analysis for Asbury Automotive Group.

With the latest numbers on the table, the next step is to see how these results line up with the widely followed growth and risk narratives around Asbury, and where the margin story either supports or pushes back against those views.

Curious how numbers become stories that shape markets? Explore Community Narratives

Margins Under Pressure Despite 2.7% Net Margin

• Trailing net profit margin sits at 2.7%, only slightly above the 2.5% level a year earlier, while Q4 FY 2025 net income was US$60 million on US$4.7b of revenue.
• Bears argue that thinner profitability limits flexibility, and the Q4 step down from US$147.1 million in Q3 net income to US$60 million tests that view, as it shows how quickly earnings can shift even with revenue around the US$4.7b to US$4.8b range.
  • EPS followed that pattern, moving from US$7.54 in Q3 to US$3.11 in Q4, which is a sizeable reset within the year.
  • Same store sales also softened, from 8% growth in Q3 to a 6% decline in Q4, adding to the cautious take on how resilient margins are.

If you want to see how cautious investors frame that kind of earnings reset, check the detailed bear case for Asbury: 🐻 Asbury Automotive Group Bear Case

14.3% Earnings Growth Versus Flat Five Year Trend

• Over the last 12 months, earnings grew 14.3% year over year compared with a five year compound trend of a 0.1% decline per year, while trailing twelve month net income reached US$492 million and basic EPS was US$25.23.
• Bulls point to that 14.3% earnings growth as a sign of improving fundamentals, and the trailing revenue base of US$18.0b along with a 1% same store sales increase over the last twelve months gives them concrete numbers to anchor that view.
  • The fact that earnings grew faster than revenue in the trailing period, with revenue at US$18.0b and margin at 2.7%, supports the idea that profitability has held up on a larger sales base.
  • Forecasts calling for about 13% annual earnings growth use this recent 14.3% outcome as a starting point, so bulls see the latest year as consistent with that growth profile.

Bulls and long term holders often connect those earnings trends into a bigger picture for the stock, so it can be worth reading the full bull narrative next: 🐂 Asbury Automotive Group Bull Case

P/E Of 8.9x And DCF Fair Value Of US$442.95

• The shares trade on a P/E of 8.9x, compared with a 20.8x average for the US Specialty Retail industry and 22.6x for peers, and the DCF fair value in the data is US$442.95 versus a current share price of US$225.21.
• What stands out for bullish thinkers is the gap between that apparent valuation discount and the key risk that debt is not well covered by operating cash flow, so they weigh an 8.9x P/E and improving 2.7% net margin against the flagged leverage coverage concern.
  • Revenue is forecast to grow around 7.7% per year, which is slower than the 10.2% figure cited for the broader US market, so part of that P/E gap may be tied to more moderate growth expectations.
  • At the same time, the 14.3% earnings growth over the past year and the DCF fair value of US$442.95 give bulls a numerical counterpoint to the cautious view on leverage.

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on Asbury Automotive Group's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

See What Else Is Out There

Asbury's tighter EPS and net income in Q4, together with concerns about debt coverage and soft same store sales, highlight balance sheet and resilience questions.

If that mix of margin pressure and leverage risk makes you cautious, take a few minutes to compare it with companies in our solid balance sheet and fundamentals stocks screener (45 results) that prioritize stronger financial foundations and potentially steadier performance through changing conditions.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com