Asbury Automotive Group's Fourth Quarter Earnings: A Drive to Remember
Duluth, GA?Asbury Automotive Group, Inc. (NYSE: ABG) has revved up investor interest with its recent earnings announcement for the fourth quarter of 2019, showcasing a remarkable performance that may set the tone for its competitors in the automotive retail sector.
Record Earnings and a Boost in EPS
Asbury reported an EPS of $2.26 per diluted share, marking a 10% increase over the prior year?s fourth quarter EPS of $2.06. This earnings surprise has undoubtedly caught the market?s attention, as it aligns with the company?s revenue forecast, which also showed a healthy 6% growth in total revenue.
In a world where EPS consensus often dictates stock trajectories, Asbury?s robust performance raises the question?can this momentum carry into 2020? The automotive retail landscape is known for its volatility, but Asbury seems to be steering its ship with clarity and purpose.
Adjusted EPS: The Non-GAAP Narrative
In a move that has become standard practice, Asbury also reported an adjusted EPS of $2.53, up 15% from the prior year. This non-GAAP figure, while not as glamorous as its GAAP counterpart, tells a compelling story of operational efficiency and strategic alignment. Investors often look for adjusted earnings to get a clearer picture of a company's true profitability, and Asbury's ability to deliver here should not be overlooked.
However, let?s not forget the context?this adjusted figure comes with a few caveats. The fourth quarter earnings were impacted by various charges, including a $7.1 million pre-tax charge for franchise rights impairments. While this doesn't take away from the overall positive narrative, it's a reminder that the automotive sector can throw some curveballs.
Operational Highlights and Strategic Moves
Asbury's operational summary is equally impressive. The company not only increased its used unit sales by 15% but also saw an 8% growth in parts and service gross profit. This is notable in an industry where margins are often tighter than a well-worn seatbelt.
David Hult, Asbury's President and CEO, has clearly put the pedal to the metal. His announcement regarding the acquisition of 20 Park Place luxury franchises in the Dallas-Fort Worth market could significantly transform Asbury?s portfolio, pushing it closer to a 50% luxury store representation. This strategic shift may help the company capture a lucrative market segment, potentially driving future revenue forecasts even higher.
Looking Ahead: What?s Next for Asbury and the Sector?
The question on everyone?s mind is whether this stellar performance can be sustained. Asbury?s ability to navigate challenges?ranging from economic fluctuations to competitive pressures?will be put to the test in the upcoming quarters. With an eye on maintaining its growth trajectory, the company seems poised to capitalize on its recent acquisitions and operational efficiencies.
For investors, Asbury could represent a solid bet amidst a sector that is often subject to unpredictable shifts. If the company continues to deliver on its revenue forecasts and exceeds EPS expectations, it might just find itself in the fast lane while others are stuck in traffic.