Asbury Automotive (ABG.N): Dealer Group Re-rates Back to Historical Level

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Asbury Automotive (ABG.N): Dealer Group Re-rates Back to Historical Level

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30 Jul 2026 07:02:16 ET │ 20 pages

Asbury Automotive (ABG.N)

Dealer Group Re-rates Back to Historical Level

CITI'S TAKE

On July 22nd, PAG received a proposal from its two largest shareholders to buy the

share currently not owned, taking the company private. In our view, the announced

bid to buy the remaining 28% of PAG has contributed to a re-rating of the Dealer Neutral

Group. The EV/EBITDA multiple for the Group has expanded from 7.0x to 8.0x in the Price (29 Jul 26 16:00) US$248.26

week since the announcement. Between 2010-19, the Group was valued at an

average of 7.8x on an EV/EBITDA basis, in line with the post proposal level. Target price US$250.00↑

Historically, ABG has been valued at a 7% discount to the Group. We increased our from US$212.00

price target to $250 up from $212 to reflect the re-rating of the Group, in line with Expected share price return 0.7%current trading levels. We rate ABG Neutral.

Expected dividend yield 0.0%

Performance — ABG reported 2Q 2026 EPS of $6.82 versus $7.43 last year, Citi Expected total return 0.7%

estimate for earnings of $6.09, and a FactSet consensus estimate of $6.31 (ex

Market Cap US$4,622Munusual items). Variable gross selling new & used retail vehicles totaled $5,019 per

unit up from $5,012 last year and down from $5,088 in 1Q and below our estimate

of $5,090. Variable gross per unit has been relatively flat since 2024. Variable gross

has held up better than market expectations, margin performance from Service has

been better than expected, inventory discipline has resulted in lower-than- Price Performance

expected floorplan interest costs, and surplus cash was used for share repurchases. (RIC: ABG.N, BB: ABG US)