Asbury Automotive Group (ABG) Screens As Undervalued, Is The Recent Weakness Below Fair Value?

Asbury Automotive Group (ABG) has drawn fresh attention after recent price moves left the stock down over the past year while still positive over the past 5 years, raising questions about how investors are valuing the US auto retailer.

Recent trading paints a mixed picture for Asbury Automotive Group. The share price is around $208.91 after a modest 90-day share price return of 4.55%. However, the year-to-date share price return is down 11.01% and the 1-year total shareholder return has declined 13.94%. This suggests shorter term momentum has faded, even as the 5-year total shareholder return of 16.64% still reflects a longer run gain.

Compare Asbury Automotive Group's recent pullback with a hand picked 35 high quality undervalued stocks that also show solid fundamentals behind their current pricing swings.

Asbury Automotive Group is still putting up multi billion dollar revenue and profit, yet the share price has slipped over the past year. Does that recent weakness leave the business attractively valued today, or not quite?

Most Popular Narrative: 18% Undervalued

On Simply Wall St's most followed view, Asbury Automotive Group screens as undervalued, with a narrative fair value of $254.20 against the last close at $208.91. That gap rests on a story about acquisitions, digital tools, and recurring service income doing more of the heavy lifting over time.

The acquisition of Herb Chambers expands Asbury's presence in a stable, affluent market (New England) with a high mix of luxury brands. This is expected to further boost average transaction values and provide earnings resilience, supporting future revenue and margin growth.

Continued investment in digital retail via Clicklane and full rollout of the Tekion DMS are expected to drive operational efficiencies, improve employee productivity, reduce SG&A as a percent of gross profit, and increase transaction volumes, positively impacting margins and EBITDA over time.

See why 5 investors see Asbury Automotive Group as 18% undervalued.

Result: Fair Value of $254.20 (UNDERVALUED)

Still, a heavier reliance on acquisition driven expansion, along with the risk that automakers push harder into direct online sales, could both undermine the Asbury Automotive Group narrative.

Find out about the key risks to this Asbury Automotive Group narrative.

Next Steps

Mixed sentiment around Asbury Automotive Group can be a useful signal, especially when both risks and rewards are on the table. Move quickly from headlines to hard numbers by weighing the 4 key rewards and 1 important warning sign.

Looking for more investment ideas beyond Asbury Automotive Group?

If you want a broader watchlist alongside Asbury Automotive Group, use targeted screeners to surface fresh opportunities that fit your style before others do.

• Zero in on potential value opportunities by scanning a 35 high quality undervalued stocks that already combine quality fundamentals with pricing that might not fully reflect them yet.
• Target reliable cash generators by reviewing a curated 6 dividend fortresses that focus on income strength and payout resilience.
• Dial down risk in your portfolio by filtering for a 11 resilient stocks with low risk scores that score well on balance sheet strength and business stability.

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