On Thursday, CFRA made a bullish move on Asbury (NYSE:ABG) Automotive Group (NYSE:ABG), lifting the stock's rating from Hold to Buy and increasing the price target to $250 from the previous $200. The upgrade comes with a positive outlook on the company's potential for above-average earnings growth in the coming years, primarily driven by its recent acquisition and share repurchase activities.
Asbury Automotive Group, which operates auto dealerships, has been highlighted as one of the most attractively priced stocks in its sector. The firm's acquisition of Koons Automotive, the ninth largest privately owned dealership in the U.S., with over $3 billion in annual revenue, is expected to be a significant growth catalyst. This strategic move is anticipated to contribute to the company's bottom-line expansion over the next few years.
The ongoing buyback program is another factor that CFRA believes will support an increase in earnings per share (EPS) for Asbury Automotive. Share repurchases typically can enhance shareholder value by reducing the number of outstanding shares and potentially increasing EPS.
The upgraded price target of $250 indicates CFRA's confidence in Asbury Automotive's growth trajectory and reflects a notable jump from the previous target of $200. This new target suggests that the analyst firm sees substantial upside potential for the stock.
InvestingPro Insights
As Asbury Automotive Group (NYSE:ABG) garners a bullish outlook from CFRA with an upgraded rating and a higher price target, the InvestingPro platform offers additional insights that reaffirm the company's potential. With a market capitalization of $4.33 billion and a strikingly low P/E ratio of 4.98, Asbury stands out in its sector for value-oriented investors. The adjusted P/E ratio over the last twelve months as of Q3 2023 at 5.76, combined with a PEG ratio of just 0.24 during the same period, suggests that the company is trading at a discount relative to its earnings growth potential.
An InvestingPro Tip highlights that management has been actively involved in share buybacks, a strategy that aligns with CFRA's analysis of the stock's potential to increase EPS. Additionally, Asbury Automotive's high shareholder yield is a testament to its commitment to returning value to its investors.
Investors who are intrigued by these insights and wish to delve deeper can explore additional InvestingPro Tips. There are 11 more tips available, including the company's expected profitability this year and its strong returns over the last decade. For those looking to make the most informed investment decisions, using coupon code SFY24 will secure an additional 10% off a 2-year InvestingPro+ subscription, or SFY241 for an additional 10% off a 1-year subscription.
Asbury's recent performance metrics, such as a revenue growth of 2.18% over the last twelve months as of Q3 2023, and a gross profit margin of 19.19%, underscore the company's solid operational efficiency. The strategic acquisition of Koons Automotive is likely to complement these strong financials, potentially driving further growth as projected by CFRA.
In conclusion, the InvestingPro platform corroborates CFRA's optimistic stance on Asbury Automotive Group, with real-time data and expert tips that paint a picture of a company poised for growth, trading at compelling valuations, and committed to enhancing shareholder value.
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