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View the full Oct 31, 2026 version

Price: $170.05 → $198.03(+16.5%)
Discount category: Far below intrinsic value → Well below intrinsic value
Next earnings: Oct 27, 2026 → Jan 27, 2027
Next earnings is estimate: No → Yes
About: Asbury Automotive Group is one of the largest car dealer groups in the United States. At removed: June added: September 30, 2026, it operated removed: 158 added: 155 new vehicle dealerships with removed: 202 added: 197 franchises for 34 vehicle brands, and 37 collision repair centers. It sells new and used vehicles, and it repairs and services vehicles and sells parts. It also arranges vehicle loans through third-party lenders and sells add-on products such as service contracts. Its own company, Total Care Auto, Powered by Asbury, provides service contracts and other vehicle protection products. Most gross profit comes from parts and service and from finance and insurance, because new and used vehicles earn low margins. Asbury also buys and sells dealerships to change its store portfolio.
Thesis: The market prices Asbury for lower dealer profits and for the removed: risk added: costs of its change to new dealer software. The company removed: is moving added: moved all stores from the CDK dealer management system to removed: Tekion. About 70% of stores used Tekion on July 28, 2026, added: Tekion, and added: it finished the removed: rest are planned for fall added: change in mid-October 2026. The change removed: adds added: added costs and removed: lowers added: lowered store productivity while staff removed: learn added: learned the new system. In removed: Q2 added: Q3 2026, adjusted EPS fell removed: 15% added: 14% from a year earlier to removed: $6.82, added: $6.16, and SG&A rose to removed: 67.2% added: 68.5% of gross profit from removed: 63.2% added: 65.7% a year earlier. Transaction adjusted net leverage also rose to removed: 3.4 added: 3.5 times at removed: June added: September 30, 2026, from removed: 3.2 added: 3.4 times at removed: March 31. added: June 30. For the gap to close, three things must be true. The removed: Tekion rollout added: converted stores must removed: finish in fall 2026 added: show the efficiency gains that management expects, without removed: a new removed: large disruption. SG&A as a share of gross profit must move back toward the removed: 63% added: 64% level of added: the first nine months of 2025 during removed: 2027, as the converted stores improve. added: 2027. Used vehicle, parts and service, and finance and insurance gross profit must removed: keep growing, added: grow again, so that leverage falls from removed: 3.4 added: 3.5 times. The removed: first evidence comes with the Q3 2026 report on October 27, 2026. The Q4 2026 removed: report added: report, expected in early removed: 2027 added: 2027, is the first removed: full quarter removed: after added: with all stores on Tekion, and it is the removed: rollout. added: next test. If these checks pass, the gap can close over the next four to six quarters. The main reason it may not close is weaker vehicle demand. The FTC dismissed its case on add-on products on October 5, 2026, so that risk is now smaller.
Risks: The change of all stores to the Tekion dealer management system removed: adds added: added costs and removed: lowers productivity during the change. added: lowered productivity. The rollout ended in mid-October 2026, but SG&A rose to removed: 67.2% added: 68.5% of gross profit in removed: Q2 added: Q3 2026 from removed: 63.2% added: 65.7% a year earlier. If the removed: rollout has new problems or the converted stores do not improve, costs can stay high. Vehicle sales depend on consumer demand, interest rates and vehicle prices. Tariffs on imported vehicles and parts can raise costs for Asbury and for the vehicle makers. Lower demand reduces new and used vehicle gross profit. Debt is high for a dealer. Long-term debt was removed: $3.48 added: $3.37 billion at removed: June added: September 30, 2026, and floor plan notes for vehicle inventory were another removed: $1.84 added: $1.76 billion. Transaction adjusted net leverage rose to removed: 3.4 added: 3.5 times from removed: 3.2 added: 3.4 times at removed: March 31, added: June 30, 2026, while Asbury also buys back shares. On October 5, 2026, the FTC dismissed its 2024 administrative case against Asbury and three of its dealerships about the sale of add-on products, with no decision on the claims. The FTC said that it still wants price transparency from dealers and can bring cases in federal court. Asbury's own lawsuit against the FTC, filed on October 4, 2024, is still pending.
Balance sheet: Cash: removed: $36M added: $84M Debt: removed: $3.5B added: $3.4B Net debt: removed: $3.4B added: $3.3B EBITDA, last 12 months: removed: $952M added: $910M Net debt / EBITDA: 3.6× (medium) Interest cover: 4.4× removed: Debt due within 12 months: $448M Asbury funds its vehicle inventory with floor plan notes and funds the rest of the business with senior notes, real estate loans and a revolving credit facility. At removed: June added: September 30, 2026, removed: total debt outstanding added: long-term debt, including the current portion, was removed: $3.48 added: $3.37 billion, removed: with $2.25 billion of senior notes due added: down from removed: 2028 to 2032, $1.15 added: $3.57 billion removed: of real estate and mortgage loans, $70 million on the revolver and an $8 million finance lease. Debt includes the finance lease. added: at December 31, 2025. Floor plan notes payable of removed: $1.84 added: $1.76 billion are left out of debt, because the vehicles in inventory secure them. Cash is cash and added: cash equivalents of $84 million at September 30, 2026. With short-term removed: investments, including $26 added: investments and floor plan offset accounts, cash was $249 million, of which $39 million added: was held at Total Care Auto. removed: Asbury also had $144 million in floor plan offset accounts, and total added: Total liquidity was removed: $966 million added: $1.0 billion, with removed: $782 added: $821 million available removed: on added: under the added: used vehicle floor plan line and the revolver. EBITDA is adjusted EBITDA for the 12 months to removed: June added: September 30, 2026. Interest cover is operating income divided by other interest expense for the first removed: half added: nine months of 2026, without floor plan interest. With floor plan interest, it was about 3.0 times. The company's transaction adjusted net leverage ratio was added: 3.5 times at September 30, 2026, up from 3.4 times at June removed: 30, 2026. added: 30. Asbury had about $322 million left on its share repurchase authorization at removed: that date. added: September 30, 2026. The Q3 2026 Form 10-Q was not filed at the time of this update, so the split of debt by type is not shown. As of removed: Jun added: Sep 30, 2026.
Checkpoints: Oct 27, 2026: Q3 2026 earnings: Tekion rollout and costs. removed: Pending. added: Failed. Watch: SG&A as a share of gross profit lower than the 67.2% of Q2 2026 and the Tekion rollout on plan for fall 2026 pass; a higher cost share or a delay in the rollout fails. removed: Feb 15, added: Outcome: Asbury finished the Tekion rollout in mid-October 2026, but SG&A rose to 68.5% of gross profit from 67.2% in Q2 2026. Jan 27, 2027 (estimate): Q4 2026 earnings: first quarter after the rollout. Pending. Watch: Adjusted EPS growth from a year earlier and transaction adjusted net leverage below removed: 3.4 added: 3.5 times pass; a further fall in adjusted EPS or higher leverage fails.
Recent events: Oct added: 27, 2026: Asbury reported Q3 2026 results. Revenue fell 8% to $4.4 billion. Net income fell 29% to $105 million, or $5.84 per diluted share, and adjusted EPS fell to $6.16 from $7.17. SG&A was 68.5% of gross profit, or 67.4% on an adjusted basis. All active stores used Tekion by mid-October 2026, and Total Care Auto products were in all stores in October. Transaction adjusted net leverage was 3.5 times, and Asbury bought back about 1.35 million shares for $278 million in the first nine months of 2026. Oct 6, 2026: Asbury said that it will report Q3 2026 results before the market opens on October 27, 2026, with a call at 10:00 a.m. ET. Oct 5, 2026: The FTC dismissed its 2024 administrative case against Asbury and three of its Texas dealerships about add-on products. It gave limited resources and the slow case as the reasons, and no court decided the claims. The FTC said that it still wants price transparency from dealers. Asbury's own lawsuit against the FTC is still pending. Aug 31, 2026: Asbury named Wendy Reynolds-Dobbs as Senior Vice President and Chief Human Resources Officer, effective September 14, 2026. The former head of human resources, Jed Milstein, left the company on August 19, 2026, and will consult until the end of 2026. Jul 28, 2026: Asbury reported Q2 2026 results. Revenue was $4.4 billion. Net income fell 25% to $115 million, or $6.25 per diluted share, and adjusted EPS fell to $6.82 from $7.43. Asbury bought back about 668,000 shares for $131 million. About 70% of its stores used the Tekion system, and transaction adjusted net leverage was 3.4 times. May 4, 2026: Daniel Clara became President and Chief Executive Officer after the annual meeting, as the board decided in December 2025. David Hult, the former CEO, stays on the board. Stockholders also approved the removal of all supermajority voting requirements from the charter. Apr 28, 2026: Asbury reported Q1 2026 results. Net income was $188 million, or $9.87 per diluted share, which included a net gain of $94 million after tax from dealership sales. Adjusted EPS fell to $5.37 from $6.82. In the quarter, Asbury sold ten dealerships for net proceeds of about $210 million and ended seven franchises. More than 50% of stores used Tekion.