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Asbury Automotive Group, Inc. (ABG) Hit a 52 Week High, Can the Run Continue?
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Have you been paying attention to shares of Asbury Automotive Group (ABG - Free Report) ? Shares have been on the move with the stock up 10.1% over the past month. The stock hit a new 52-week high of $256.39 in the previous session. Asbury Automotive Group has gained 39.9% since the start of the year compared to the 15.1% move for the Zacks Retail-Wholesale sector and the 44.1% return for the Zacks Automotive - Retail and Whole Sales industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on April 25, 2023, Asbury Automotive reported EPS of $8.37 versus consensus estimate of $7.94 while it missed the consensus revenue estimate by 3.3%.
For the current fiscal year, Asbury Automotive is expected to post earnings of $31.71 per share on $14.49 billion in revenues. This represents a -15.8% change in EPS on a -6.13% change in revenues. For the next fiscal year, the company is expected to earn $29.84 per share on $14.89 billion in revenues. This represents a year-over-year change of -5.88% and 2.79%, respectively.
Valuation Metrics
Asbury Automotive may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Asbury Automotive has a Value Score of A. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 7.9X current fiscal year EPS estimates, which is not in-line with the peer industry average of 8.1X. On a trailing cash flow basis, the stock currently trades at 6X versus its peer group's average of 5.9X. Additionally, the stock has a PEG ratio of 0.43. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Asbury Automotive currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Asbury Automotive passes the test. Thus, it seems as though Asbury Automotive shares could have a bit more room to run in the near term.
How Does ABG Stack Up to the Competition?
Shares of ABG have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is AutoNation, Inc. (AN - Free Report) . AN has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of A, and a Momentum Score of A.
Earnings were strong last quarter. AutoNation, Inc. beat our consensus estimate by 8.04%, and for the current fiscal year, AN is expected to post earnings of $21.77 per share on revenue of $25.86 billion.
Shares of AutoNation, Inc. have gained 17% over the past month, and currently trade at a forward P/E of 8.14X and a P/CF of 5.49X.
The Automotive - Retail and Whole Sales industry is in the top 39% of all the industries we have in our universe, so it looks like there are some nice tailwinds for ABG and AN, even beyond their own solid fundamental situation.
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Asbury Automotive Group, Inc. (ABG) Hit a 52 Week High, Can the Run Continue?
Have you been paying attention to shares of Asbury Automotive Group (ABG - Free Report) ? Shares have been on the move with the stock up 10.1% over the past month. The stock hit a new 52-week high of $256.39 in the previous session. Asbury Automotive Group has gained 39.9% since the start of the year compared to the 15.1% move for the Zacks Retail-Wholesale sector and the 44.1% return for the Zacks Automotive - Retail and Whole Sales industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on April 25, 2023, Asbury Automotive reported EPS of $8.37 versus consensus estimate of $7.94 while it missed the consensus revenue estimate by 3.3%.
For the current fiscal year, Asbury Automotive is expected to post earnings of $31.71 per share on $14.49 billion in revenues. This represents a -15.8% change in EPS on a -6.13% change in revenues. For the next fiscal year, the company is expected to earn $29.84 per share on $14.89 billion in revenues. This represents a year-over-year change of -5.88% and 2.79%, respectively.
Valuation Metrics
Asbury Automotive may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Asbury Automotive has a Value Score of A. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 7.9X current fiscal year EPS estimates, which is not in-line with the peer industry average of 8.1X. On a trailing cash flow basis, the stock currently trades at 6X versus its peer group's average of 5.9X. Additionally, the stock has a PEG ratio of 0.43. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Asbury Automotive currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Asbury Automotive passes the test. Thus, it seems as though Asbury Automotive shares could have a bit more room to run in the near term.
How Does ABG Stack Up to the Competition?
Shares of ABG have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is AutoNation, Inc. (AN - Free Report) . AN has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of A, and a Momentum Score of A.
Earnings were strong last quarter. AutoNation, Inc. beat our consensus estimate by 8.04%, and for the current fiscal year, AN is expected to post earnings of $21.77 per share on revenue of $25.86 billion.
Shares of AutoNation, Inc. have gained 17% over the past month, and currently trade at a forward P/E of 8.14X and a P/CF of 5.49X.
The Automotive - Retail and Whole Sales industry is in the top 39% of all the industries we have in our universe, so it looks like there are some nice tailwinds for ABG and AN, even beyond their own solid fundamental situation.