ASBURY AUTOMOTIVE GROUP, INC. (ABG): what the price requires
The current priced-in claim for ASBURY AUTOMOTIVE GROUP, INC. (ABG) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.
Generated: 2026-07-14 · Source: https://boothcheck.com/report/ABG
Headline
| Field | Value |
|---|---|
| Ticker | ABG |
| Company | ASBURY AUTOMOTIVE GROUP, INC. |
| Current price | $210.67/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 1.6% |
| Operating margin today | 5.3% |
| Margin compression implied | -3.7pp |
| Multiple paid | 8x operating income |
The operating-margin requirement is derived from the framework's value band at year 7, a separately labeled basis from the headline growth/duration solve.
The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.
Solve inputs: computed at a 7.6% cost of capital with 4% terminal growth over a 5-year stage.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -1.07σ |
| cohort percentile (of 210 peers) | 11 |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 0.58x | 5 | justifies |
| Earnings | 0.69x | 5 | justifies |
| Relative | 0.43x | 5 | justifies |
| Growth | 0.62x | 3 | justifies |
Families that justify the price: Asset, Earnings, Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.8%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $1319.12 | 0.16x | yes | FCF base $0.8B, growth 5% (input: historical growth), terminal g 4.0%, WACC 6.8%, 5yr projection |
| DCF Exit Multiple | Growth | $340.98 | 0.62x | yes | Exit EV/EBITDA: 6.1x / 8.1x / 10.1x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $472.08 | 0.45x | yes | P/E 14.92x (blended: static sector reference 20x + trailing (TTM) 7x), scenarios: 12.6x / 14.9x / 17.3x (bear / base = reference held flat / bull), EV/EBITDA 14x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $311.64 | 0.68x | yes | BV/sh $206.95, ROE (TTM) 13.9%, ke 9.3% |
| Two-Stage Excess Return | Asset | $378.52 | 0.56x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $159.78 | 1.32x | yes | Rev $18.0B, growth 5% (input: historical growth; tapered), Terminal P/S: 0.2x / 0.2x / 0.3x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $339.48 | 0.62x | yes | EPS $28.29, growth 1% (input: historical EPS growth), PEG=6.20 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $416.54 | 0.51x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $1.01B × (1−25%) / WACC 6.8% → EPV (no growth) |
| Residual Income | Asset | $391.07 | 0.54x | yes | BV $206.95 + 5yr PV of (ROE (TTM) 13.9% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $362.95 | 0.58x | yes | √(22.5 × EPS $28.29 × BVPS $206.95) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $493.42 | 0.43x | yes | EBITDA $0.91B × sector EV/EBITDA 14.0x |
| FCF Yield | Earnings | $265.90 | 0.79x | yes | FCF $773.4M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $249.00 | 0.85x | yes | SBC-adj FCF $0.74B (FCF $0.77B − SBC $0.03B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $912.82 | 0.23x | yes | EPS $28.29 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $61.44 | 3.43x | yes | BV $206.95 × (ROIC 2.0% / WACC 6.8%) |
| P/Sales Sector | Relative | $1418.17 | 0.15x | yes | Revenue $17.96B × sector P/S 1.5x |
| PEG Fair Value | Relative | $1060.88 | 0.20x | yes | EPS $28.29 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $305.84 | 0.69x | yes | EPS $28.29 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $3.5b |
| Net debt / NOPAT (after-tax) | 5.07x |
| Net debt / operating income (pre-tax) | 3.80x |
| Share count CAGR (buyback) | -4.6% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- The counterintuitive finding is how cheap this is: at $197 the stock trades around 8 times operating income, and nearly every valuation method, asset, earnings-power, peer-multiple, and growth, lands well above the price. The book value alone is about $207 per share, more than the stock.
- The business is a large franchised auto-dealer group earning a 13.9% return on equity and roughly $28 of earnings per share, with a steady, high-margin parts-and-service segment underneath the cyclical vehicle sales. Management is shrinking the share count about 4.6% a year through buybacks.
- The catch is leverage and the cycle. Net debt is about $3.5 billion, several turns of operating income, and Q1 2026 EPS of $5.37 missed expectations as weather and a dealer-management-system rollout weighed. The stock is cheap, but auto retail is cyclical and the balance sheet carries real debt.
Bull Case
The surprising thing about Asbury is that almost nothing about the valuation fits the obvious narrative that auto dealers are low-quality, low-multiple businesses. Run the numbers and nearly every method says the stock is worth more than it trades for. Book value is about $207 per share against a $197 price (June 27, 2026), so the stock trades below its accounting net worth. The earnings-power method, on normalized operating income, lands above $400. The relative and excess-return methods land in the $300s to $400s. Even the conservative Graham number lands near $363. When the asset frame, the earnings frame, and the peer frame all point the same direction and all point well above the price, the burden shifts to explaining why it is cheap, not why it is worth owning.
The quality underneath is better than the dealer label implies, and the reason is the parts-and-service business. New and used vehicle sales are cyclical and low-margin, but every car Asbury sells creates a multi-year stream of service, parts, and warranty work at much higher margins, plus finance-and-insurance income on the sale itself. The FY2025 10-K shows same-store parts and service revenue growing to about $2.29 billion, with customer-pay revenue up 4% (FY2025 10-K, accession 0001144980-26-000051). That recurring, high-margin annuity is what makes a dealer group more durable than its cyclical top line suggests, and it is why gross margin expanded to 17.7% in the first quarter of 2026 even with weather disruptions and a systems-rollout drag.
The capital allocation closes the case. Asbury earns a 13.9% return on equity, well above its cost of capital, and management is returning that to owners through aggressive buybacks, shrinking the share count about 4.6% a year, while pruning the portfolio through selective divestitures. Buying back stock that trades below book value is accretive in the most direct way: each repurchase increases every remaining holder's claim on the assets and earnings. Management reaffirmed its cost-efficiency targets and expects further operating gains once the new dealer-management system is fully converted by fall. The bull case is a high-return, cash-generative business with a durable service annuity, trading below book value while management buys back stock hand over fist. That combination is rare, and the price is not crediting it.
Bear Case
The structural truth a holder has to sit with is that this is a leveraged, cyclical business at what may be a favorable point in its cycle, and cheap can stay cheap for exactly that reason. Net debt is about $3.5 billion, several turns of operating income, and a meaningful share of a dealer's debt is floor-plan financing and real-estate mortgages tied to inventory and property. That leverage magnifies the cycle: when vehicle demand and gross-profit-per-unit are strong, the equity looks cheap on trailing earnings, and when the cycle turns, the same debt that flattered returns on the way up compresses them on the way down. Auto retail margins normalized hard after the post-pandemic boom in gross-profit-per-unit, and the market may simply be unwilling to capitalize current earnings as durable.
The first quarter showed the fragility in real time. Adjusted EPS of $5.37 missed expectations of $5.67, and revenue of $4.1 billion came in below estimates, with weather disruptions and the costs of rolling out a new dealer-management system weighing on results. Management frames these as temporary, and they may be, but a business that misses on a combination of weather and a self-inflicted systems transition is a business with thin margin for error. New-vehicle gross profit per unit, the metric that drove the post-pandemic windfall, is gradually normalizing lower, and there is no guarantee the service annuity fully offsets a sustained decline in vehicle-sale economics.
The longer-term overhangs are the ones the cheap multiple is arguably pricing. The franchised-dealer model faces the slow-moving threat of direct-to-consumer electric-vehicle sales that bypass dealers entirely, shifts in manufacturer-dealer agreements, and the secular question of whether car ownership patterns change. None of these are imminent, but they are the reason the market assigns auto dealers a low multiple despite high current returns. The valuation methods all say undervalued on current numbers, but they are capitalizing earnings from a cyclical peak with a debt load that amplifies any downturn. The bear case is not that Asbury is a bad business. It is that it is a cyclical, leveraged dealer whose current earnings may not be the durable level, and the discount to book and to the methods may be the market correctly pricing that risk rather than an opportunity it has missed.
Valuation
The price inverts to an unusually low bar. At $197 the market is paying about 8 times company-wide operating income, a multiple so low that the price sits below what even a 5% annual decline in operating profit would warrant. That is a bound, not a solved point: the price embeds outright deterioration, and the implied pace is within what Asbury has recently delivered, so the read comes out within range. The market is pricing decline into a business that is still earning a 13.9% return on equity, which is the central tension of the valuation.
The valuation X-ray is almost uniformly above the price, which is rare and worth stating plainly. The asset methods land in the $300s (simple excess return near $312, two-stage near $379, residual income near $391), the earnings-power methods land near $250 to $425, and the relative methods, run partly on a depressed trailing multiple, land from the high $300s into the $400s. Book value alone is about $207, above the price. The one method that lands below, the discounted-future-market-cap model near $150, does so only because it applies a very low terminal price-to-sales multiple appropriate to a thin-margin dealer. Set that aside and the central tendency of the methods sits well above $197, with a blended read around $359. When this many independent frames cluster above the price, the stock is cheap on current fundamentals by almost any measure.
The reconciliation is leverage and cyclicality, which the methods do not fully penalize. Net debt of about $3.5 billion is roughly 4.3 times operating income, and much of it is floor-plan and mortgage debt that scales with the business but still represents real fixed obligations. The methods capitalize current earnings without fully discounting the risk that those earnings are a cyclical peak or that the debt amplifies a downturn. So the honest conclusion is that Asbury screens as deeply undervalued on its assets and current earnings, and the gap between that and the price is the market's collective judgment about the durability of dealer profitability and the leverage behind it. If current earnings hold, the price is too low. If they were a peak, the discount is the market pricing the cycle, not missing the value.
Catalysts
The first-quarter 2026 report, released in late April, was a miss against expectations. Adjusted EPS came in at $5.37 versus a roughly $5.67 estimate, and revenue of $4.1 billion fell short of forecasts, with weather disruptions and the costs of rolling out the Tekion dealer-management system weighing on the quarter. Still, gross margin expanded to 17.7%, adjusted EBITDA was $207 million at a 5% adjusted operating margin, new-vehicle gross profit per unit held relatively stable, and used-vehicle gross-profit-per-unit continued to grow. Management reaffirmed its SG&A-to-gross targets and pointed to operating efficiency gains once the systems conversion completes by fall.
The forward catalysts are operational and capital-allocation driven. The items to watch are the completion of the Tekion dealer-management-system rollout and the efficiency gains management expects from it, the trajectory of new- and used-vehicle gross profit per unit as the industry normalizes, the continued growth of the high-margin parts-and-service business, and the pace of share repurchases and portfolio divestitures. The leverage and any deleveraging progress are worth monitoring given the debt load. The next quarterly print, due in late July, will show whether the first-quarter miss was the weather-and-systems anomaly management described or the start of margin normalization. A clean quarter with restored efficiency and continued buybacks would support the deep-value read; another miss would reinforce the market's skepticism about dealer earnings durability.
Sources: Asbury Automotive Q1 2026 results (quiverquant.com, minichart.com.sg); ABG Q1 2026 earnings call transcript (news.alphastreet.com); Simply Wall St Q1 2026 valuation note (simplywall.st).
Peer Cohorts (Per Segment, With Filing Citations)
Core business (reported)
- PAG (Penske Automotive Group, Inc.)
- (no filing in the citation store)
- AN (AUTONATION, INC.)
- (no filing in the citation store)
- LAD (Lithia Motors, Inc.)
- (no filing in the citation store)
- GPI (Group 1 Automotive, Inc)
- (no filing in the citation store)
- SAH (SONIC AUTOMOTIVE, INC.)
- (no filing in the citation store)
- RUSHA (RUSH ENTERPRISES, INC.)
- (no filing in the citation store)
- KMX (CARMAX, INC.)
- (no filing in the citation store)
- CVNA (CARVANA CO.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.