Why Is Asbury Automotive (ABG) Up 0.2% Since Last Earnings Report?
A month has gone by since the last earnings report for Asbury Automotive Group (ABG). Shares have added about 0.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Asbury Automotive due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Asbury's Q2 Earnings Beat Estimates But Fall Y/Y
Asbury reported second-quarter 2023 adjusted earnings of $8.95 per share, which decreased 10.9% year over year. Earnings, however, topped the Zacks Consensus Estimate of $8.15 per share. In the reported quarter, revenues amounted to $3,742.5 million, down 5% year over year. The top line, however, surpassed the Zacks Consensus Estimate of $3,741 million.
Segment Details
In the quarter, new-vehicle revenues rose 4% year over year to $1,942.7 million, beating the Zacks Consensus Estimate of $1,849 million. Gross profit from the segment came in at $185 million, contracting 16.1% from the prior-year quarter but topping the consensus mark of $177 million.
Used-vehicle revenues slid 19% from the year-ago figure to $1,107.3 million, missing the consensus mark of $1,135 million. Gross profit from the segment came in at $71 million, which fell 31.7% and missed the Zacks Consensus Estimate of $73 million.
Net revenues in the finance and insurance businesses amounted to $166.3 million, down 18% from the year-ago quarter and lagging the consensus mark of $168 million. Gross profit was $165 million, declining 12.2% year over year but outpacing the Zacks Consensus Estimate of $164 million.
Revenues from the parts and service business rose 1% from the prior-year quarter to $526.1 million but missed the consensus mark of $546 million. Gross profit from this segment came in at $292 million, inching up 0.7% year over year but missing the consensus estimate of $299 million.
Other Tidbits
Adjusted selling, general & administrative (SG&A) expenses as a percentage of gross profit rose to 57%, marking an increase of 112 basis points year over year. Asbury sold over 11,400 vehicles, an all-time record high, through the “end-to-end” online sales platform, Clicklane.
As of Jun 30, 2023, the company had cash and cash equivalents of $77.5 million, down from $235.3 million on Dec 31, 2022. It had long-term debt of $3,240.5 million as of Jun 30, 2023, down from $3,301.2 million on Dec 31, 2022.
During the quarter under review, Asbury repurchased approximately 960,000 shares for nearly $190 million. On Jul 24, 2023, Asbury had $250 million in share repurchase authorization remaining.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 11.31% due to these changes.
VGM Scores
At this time, Asbury Automotive has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Asbury Automotive has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Asbury Automotive is part of the Zacks Automotive - Retail and Whole Sales industry. Over the past month, AutoNation (AN), a stock from the same industry, has gained 3.1%. The company reported its results for the quarter ended June 2023 more than a month ago.
AutoNation reported revenues of $6.89 billion in the last reported quarter, representing a year-over-year change of +0.3%. EPS of $6.29 for the same period compares with $6.48 a year ago.
For the current quarter, AutoNation is expected to post earnings of $5.42 per share, indicating a change of -9.7% from the year-ago quarter. The Zacks Consensus Estimate has changed +2.3% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for AutoNation. Also, the stock has a VGM Score of C.
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Asbury Automotive Group, Inc. (ABG) : Free Stock Analysis Report
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