Asbury Automotive Group stock has fallen over the past year while the broader valuation checks still lean cheap, which puts the recent share performance at odds with what the value signals suggest.
- The stock is down 18.2% over the past year, which points to a period of weak recent returns despite earlier longer term gains.
- Future growth in vehicle sales and service revenue can support earnings, while pressure on used car pricing and consumer demand remains a key risk for how the market values Asbury Automotive Group.
- The broader checks lean cheap, with Asbury Automotive Group screening as undervalued on 6 of 6 measures according to its value score of 6.
The issue now is whether the current share price already reflects the weaker recent performance or if Asbury Automotive Group still offers a valuation discount that the market has yet to close.
Contrast Asbury Automotive Group's recent share price slide with other companies that still screen as potentially cheap by reviewing our hand picked list of 51 high quality undervalued stocks.
Is Asbury Automotive Group Still Cheap on Earnings?
The P/E multiple is a useful way to see how the market prices Asbury Automotive Group relative to its earnings today. It lets you compare the stock directly with other specialty retailers that also produce steady earnings.
Asbury Automotive Group currently trades on a P/E of 7.4x. This is well below the Specialty Retail industry average P/E of 18.8x and also below the peer average of 17.8x. Based on Simply Wall St's fair P/E estimate of 14.0x, which blends factors such as the company’s margins, size and sector risks, the current level is also below what that framework suggests might be reasonable.
The gap between the current 7.4x and the 14.0x fair P/E implies the market is pricing Asbury Automotive Group at a discount to what its earnings profile and sector benchmarks would point to.
On this P/E comparison, Asbury Automotive Group stock appears undervalued relative to both its industry and the modelled fair multiple.
See what the numbers say about this price — find out in our valuation breakdown.
The Asbury Automotive Group Narrative: What Would Justify Today's Price?
Simply Wall St Narratives pick up where this valuation puzzle for Asbury Automotive Group leaves off by spelling out which combinations of future growth, margins and earnings would need to play out for the stock to be worth materially more or less than it is today on the market. Rather than relying on a single multiple or model output, each Narrative sets out the assumptions behind its fair value so you can compare them with Asbury Automotive Group's actual results on the Community page as they are reported.
One of the top community narratives on Asbury Automotive Group: 17% undervalued
"Ongoing portfolio optimization through selective acquisitions and divestitures, combined with active debt reduction and opportunistic share repurchases, is likely to enhance ROIC, expand net margins, and drive EPS growth as operational leverage increases with scale..."
Read one of the top narratives on Asbury Automotive Group
Do you think there's more to the story for Asbury Automotive Group? Head over to our Community to see what others are saying!
The Bottom Line
Asbury Automotive Group screens as undervalued on earnings multiples, which suggests the market is assigning a cautious view to its current profit profile compared with peers. The broader valuation checks still lean supportive of a discount, so the key question is whether that gap closes or proves justified. What matters most from here is whether vehicle sales and service revenue hold up well enough, and used car and consumer demand risks stay contained, to support the earnings that would make this pricing look conservative rather than fair.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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