ABG

Asbury is a high-quality auto retail compounder trading at a deep-value multiple. FY2025 revenue grew 4.7% to $18.0B and net income rose 14.3% to $492M, with diluted EPS up 16.9% to $25.13 — a result of the July 2025 Herb Chambers acquisition layered on top of a disciplined buyback program that shrank shares 2.0% YoY. At $206.33, the stock trades at just 8.2x trailing earnings and 0.2x sales, a valuation that implies the market is pricing in a cyclical earnings collapse that the filing does not support. ROE of 12.6% on a $3.89B equity base, combined with $775M of operating cash flow (+15.5% YoY), shows the cash engine is intact even as new-vehicle margins normalize from post-COVID highs.

The MD&A reveals a deliberate mix shift toward the highest-margin, most defensive parts of the business. Parts & service gross profit grew 9% to $1.47B and now contributes 47.9% of total gross profit (up from 45.8%), while F&I adds another 23.4%. Together these two annuity-like streams generate ~71% of gross profit on just ~18% of revenue — a far more durable economic profile than headline auto-retail multiples suggest. Management is also actively pruning: 24 franchises (15 locations) divested in 2025 produced an $80.2M net divestiture gain, and capital is being recycled into the Herb Chambers footprint and $99.9M of buybacks (432,752 shares).