Will Ricky Sandler’s Hot Streak Continue in Asbury Automotive Group, Inc. (ABG)?

The other three peers, which are closer to Asbury in terms of their market value, all carry trailing earnings multiples clustered in the 14-15 range. As a result of high expected growth, their forward P/Es also fall a similar level and the highest of these is 12, at Lithia Motors Inc (NYSE:LAD). All three are therefore in value territory in that regard. We would note that the most recent financials for Sonic Automotive Inc (NYSE:SAH) and Penske Automotive Group, Inc. (NYSE:PAG) aren’t as strong as those at the other three companies, as earnings rose by less than 5% in their most recent quarter compared to the same period in the previous year. We wouldn’t rule them out as potential value stocks, but the somewhat weaker performance is notable. Lithia Motors Inc (NYSE:LAD) was in line with Asbury and AutoNation, Inc. (NYSE:AN) in delivering impressive financials. It’s also important to consider that the four small companies (that is, those other than AutoNation) all feature betas of 1.6 or higher demonstrating sensitivity to economic conditions.

The auto dealer industry in general looks somewhat interesting in terms of its value prospects: a number of companies have fairly cheap earnings multiples and have been recording impressive numbers recently. We think that investors could be well served to start by looking more deeply into Asbury Automotive Group, Inc. (NYSE:ABG) and potentially the company’s peers as well.

Disclosure: I own no shares of any stocks mentioned in this article.