Asbury Automotive Group, Inc. - Value

Even though the auto sector is hot, you can still find value stocks. Asbury Automotive Group, Inc. (ABG) is trading at 10.6x forward estimates even as shares are near 52-week highs.

Asbury Automotive is the 6th largest auto retailer in the nation with 81 locations that sell 37 different brands, including both American and imports as well as heavy trucks. 85% of its sales are from import brands.

Beat for the 4th Time in a Row

On Oct 26, Asbury reported its third quarter results and kept its earnings streak alive by surprising on the Zacks Consensus by 2.4%. Earnings per share were 42 cents, just eking out a beat against the 41 cent consensus estimate. But a beat is a beat.

The company has put together an average beat of 35.3% over the prior 4 quarters and has put together a pretty solid track record of late.

Revenue rose 9% to $1.1 billion as used vehicle revenue rose 19%, new vehicle revenue jumped 6% and parts & service rose 2%. Quarter over quarter, the new vehicle market was relatively flat industry wide.

Double Digit Earnings Growth Expected in 2010 and 2011

Analysts are expecting earnings growth of 76% in 2010 with the Zacks Consensus Estimate rising a penny to $1.45 per share in the last 90 days. The company made just 82 cents in 2009.

The growth is expected to continue in 2011, with earnings projected to increase another 23% to $1.78 per share.

Asbury is Still a Cheap Stock

In addition to its low P/E, Asbury Automotive Group has a price-to-book ratio of 2.2 which is within the value parameters.

It also has a low price-to-sales ratio of just 0.2.

With the big growth and the low P/E, Asbury has a PEG of just 0.5. That makes it both a value and a growth stock which is a powerful combination.

Asbury is a Zacks #2 Rank (buy) stock. It is scheduled to report fourth quarter results on Feb 24.

Read the June 9, 2010 article.

Update to Previous Value Zacks Rank Buy Stocks

Earnings forecasts continue to climb for the mining companies as commodities prices soar. Teck Resources Limited (TCK) is expected to grow earnings by 91% in 2010. With big growth and a low P/E ratio, Teck is trading with a PEG of just 0.6. Read the full article.

The energy play is back as drilling has picked up across North America. Complete Production Services, Inc. (CPX) has gone from an earnings loss in 2009 to big profit in 2010. Despite shares surging over the course of the last year, CPX still trades at just 10.7x forward estimates. Read the full article.

Is there any further upside in the semiconductor sector? Kulicke & Soffa Industries, Inc. (KLIC) has surprised on estimates the last 7 quarters as the recovery took hold but its last beat was by just 2.4%. Read the full article.

Companies with their hands in lots of pots are benefiting from the upside in the global economy. Carlisle Companies (CSL), a diverse manufacturer, is using acquisitions to expand its reach into the emerging markets. This Zacks #1 Rank (strong buy) is expected to grow earnings by 24% in 2011. Read the full article.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.

 
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