Asbury Automotive rises 2.2% despite Q4 miss on record full-year results
Automotive retailer hits $18 billion annual revenue milestone while margins expand to 17%
Asbury Automotive Group shares climbed 2.2% on Thursday after the automotive retailer reported quarterly earnings that fell short of analyst estimates, while delivering a record-breaking full-year performance and expanding margins.
The Georgia-based company reported fourth-quarter revenue of $4.68 billion, missing the $4.84 billion consensus estimate, while adjusted earnings per share came in at $6.67 compared with expectations of $6.84. The shortfall was driven by $115 million in non-cash asset impairment charges, which weighed on quarterly results.
Despite the quarterly miss, investors focused on the company's broader strategic achievements throughout 2025. Full-year revenue reached a record $18 billion, up 5% from the prior year, while net income increased 17% year-over-year to $492 million. The company also returned $100 million to shareholders through stock repurchases and expanded its operating margin by 31 basis points to 17%.
"We achieved record revenue and adjusted net income for the full year, demonstrating our ability to navigate a challenging operating environment," according to the company's earnings announcement published on Business Wire. Adjusted operating cash flow reached $651 million, providing substantial liquidity for continued strategic investments and shareholder returns.
The stock's positive reaction following the quarterly miss reflects investor confidence in Asbury's long-term trajectory. Shares of the Duluth-based company currently trade at $237.04, roughly 8% below the consensus analyst target price of $255.50, according to market data. The company's trailing price-to-earnings ratio of 8.32 represents a significant discount to broader market averages, suggesting investors may be pricing in ongoing challenges in the automotive retail sector.
Asbury's performance comes against a backdrop of broader headwinds facing automotive retailers. U.S. new vehicle sales are projected to decline approximately 2% in 2026 to around 16 million units, while battery electric vehicle adoption has decelerated in many regions. Hybrid vehicles have emerged as the growth segment, with affordability concerns and higher interest rates continuing to pressure consumer demand.
Analysts maintain a consensus "Hold" rating on the stock with a price target of $254.67, according to Public.com. Analysts have cited operational challenges and declining used vehicle units sold per store as areas of concern, though they also acknowledge the company's disciplined capital allocation strategy, which included $186 million in capital expenditures during 2025 and the acquisition of $2.9 billion in annualized revenue.
During the fourth quarter, Asbury divested four stores representing approximately $150 million in annualized revenue, part of a strategic portfolio optimization effort. The company has been focusing on operational efficiency and technological integration across its dealership network, positioning itself for what industry observers expect to be a moderate growth environment for automotive retail in 2026.
The company's margin expansion to 17% is particularly noteworthy given the competitive pressures in the automotive retail space. Service operations, which typically offer higher margins than new vehicle sales, have become an increasingly important component of dealer profitability as new vehicle inventory levels normalize and pricing pressures intensify.
Looking ahead, Asbury did not provide formal guidance in its earnings release. However, management has emphasized its focus on operational excellence and strategic capital allocation, including potential further share repurchases and targeted acquisitions that align with its disciplined investment criteria. The company's strong cash flow generation of $651 million provides substantial flexibility to pursue these initiatives while navigating a rapidly evolving automotive retail landscape.