Asbury Automotive (ABG) An Attractive Buy


Asbury Automotive Group Inc ABG is showing excellent growth in terms of sales and revenue—which is projected to continue—and is also at an appealing buy point from a technical perspective.

Asbury is a collection of new and used vehicle dealerships and collision centers operating in 14 states.

Appealing Fundamentals And Statistics Of Asbuary (ABG) Stock

  • EPS has grown 45.1% per year, on average, over the last five years.
  • Analysts expect 18.5% yearly EPS growth over the next five years. The average growth forecast for S&P 500 stocks is 8.8%, which means if ABG can deliver, it should well outperform the S&P 500.
  • Historically the stock has outperformed the S&P 500 five-year return, by 13% per year. The S&P 500 has returned 10.4% over the last five years, so ABG stock has returned almost 24% per year.
  • Sales have grown 18.8% per year over the last five years.
  • It's trading at its lowest P/E in a decade. The current reading is 4.4. P/E values have ranged between 3.9 to 26 over the last 10 years. Most of that time has been spent above 10. 

It's impossible to know if a company can keep growing as expected, but at least Asbury has been doing it recently, and the stock price is performing to reflect that. If growth continues, the stock price should continue to act accordingly.

Asbury is expected to release earnings between April 25 and 27.

Absbury Automotive Technical Outlook And Price Forecast

Technically, the stock has pulled back to the top of a big range it broke out of in early 2023.

 The stock moved sideways in 2022 and is one of the few stocks to be hitting new all-time in 2023, as the major stock indices are still well below their prior highs.

Chart source: TradingView

The price has recently moved back into the old range, and it is unclear how far it may decline on this current pullback.

Given the fundamentals, buying lower in the range between $180 and $160, or even down to $140 is an attractive proposition. The current price is likely a great long-term value.

On the other hand, buying if the price moves above $212 would signal the stock is starting to move up again. The high of the last few weeks is $211.46.

Even if P/E doesn't increase, yet the company can grow EPS at about 18% per year, that puts earnings at above $70 per share in five years. A four-times P/E multiple puts the share price at $280. A very conservative target.

But this stock rarely trades a four P/E. Eight to 10 is more realistic. Over the next five years, that puts the price north of $560.

The future is uncertain. EPS may not grow as expected, or the stock could keep dropping before it rallies, if it rallies. Consider your own risk tolerance before trading.

Disclaimer: The author doesn't currently hold a position, but may initiate one over the next several weeks or months if conditions in the indices continue to improve.

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