ABG changes
Pick any two versions below to diff them.
- Price
- $169.87 → $164.05(−3.4%)
- Discount
- 37% to 53% → 39% to 55%(+2.0 pts)
- Next earnings
- 2026-10-28 → 2026-10-27
- Next earnings is estimate
- Yes → No
- Thesis
- The market prices Asbury for lower dealer profits and for the risk of its change to new dealer software. The company is moving all stores from the CDK dealer management system to Tekion. About 70% of stores used Tekion on July 28, 2026, and the rest are planned for fall 2026. The change adds costs and lowers store productivity while staff learn the new system. In Q2 2026, adjusted EPS fell 15% from a year earlier to $6.82, and SG&A rose to 67.2% of gross profit from 63.2% a year earlier. Transaction adjusted net leverage also rose to 3.4 times at June 30, 2026, from 3.2 times at March 31. For the gap to close, three things must be true. The Tekion rollout must finish in fall 2026 without a new large disruption. SG&A as a share of gross profit must move back toward the 63% level of 2025 during 2027, as the converted stores improve. Used vehicle, parts and service, and finance and insurance gross profit must keep growing, so that leverage falls from 3.4 times. The first evidence comes with the Q3 2026 report, estimated for about on October 2827, 2026. The Q4 2026 report in early 2027 is the first full quarter after the rollout. 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 or an adverse result in the. 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 adds costs and lowers productivity during the change. SG&A rose to 67.2% of gross profit in Q2 2026 from 63.2% a year earlier. If the rollout has new problems or the converted stores do not improve, costs can stay high. Since August 16, 2024, the FTC has an enforcement action against Asbury and three of its dealerships about the sale of add-on products. Asbury disputes the claims and sued the FTC on October 4, 2024. Both cases are still pending, and the company cannot predict the outcome. 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 $3.48 billion at June 30, 2026, and floor plan notes for vehicle inventory were another $1.84 billion. Transaction adjusted net leverage rose to 3.4 times from 3.2 times at March 31, 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.
- Checkpoints
- Oct 2827, 2026 (estimate): Q3 2026 earnings: Tekion rollout and costs. Pending. 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. Feb 15, 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 3.4 times pass; a further fall in adjusted EPS or higher leverage fails.
- Recent events
- 2026-10-06: 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. 2026-10-05: 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. 2026-08-31: 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. 2026-07-28: 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. 2026-05-04: 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. 2026-04-28: 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.