AutoNation (NYSE: AN) and Asbury Automotive Group (NYSE:ABG) are both retail/wholesale companies, but which is the better investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, dividends, profitabiliy, analyst recommendations, earnings and valuation.

Profitability

This table compares AutoNation and Asbury Automotive Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
AutoNation 2.00% 18.40% 4.24%
Asbury Automotive Group 2.61% 52.23% 5.83%

Institutional & Insider Ownership

66.1% of AutoNation shares are owned by institutional investors. Comparatively, 99.9% of Asbury Automotive Group shares are owned by institutional investors. 3.1% of AutoNation shares are owned by insiders. Comparatively, 11.9% of Asbury Automotive Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings for AutoNation and Asbury Automotive Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
AutoNation 0 8 3 0 2.27
Asbury Automotive Group 1 3 0 0 1.75

AutoNation currently has a consensus price target of $48.38, indicating a potential upside of 14.69%. Asbury Automotive Group has a consensus price target of $62.00, indicating a potential upside of 10.22%. Given AutoNation’s stronger consensus rating and higher possible upside, research analysts plainly believe AutoNation is more favorable than Asbury Automotive Group.

Earnings and Valuation

This table compares AutoNation and Asbury Automotive Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
AutoNation $21.63 billion 0.20 $958.10 million $4.24 9.95
Asbury Automotive Group $6.53 billion 0.18 $329.40 million $7.81 7.20

AutoNation has higher revenue and earnings than Asbury Automotive Group. Asbury Automotive Group is trading at a lower price-to-earnings ratio than AutoNation, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

AutoNation has a beta of 1.25, suggesting that its stock price is 25% more volatile than the S&P 500. Comparatively, Asbury Automotive Group has a beta of 1.44, suggesting that its stock price is 44% more volatile than the S&P 500.

About AutoNation

AutoNation, Inc. (AutoNation) is an automotive retailer in the United States. The Company offers a range of automotive products and services, including new vehicles, used vehicles, parts and service, which includes automotive repair and maintenance services, as well as wholesale parts and collision businesses, and automotive finance and insurance products, including vehicle service and other protection products, as well as the arranging of financing for vehicle purchases through third-party finance sources. It operates through three segments: Domestic, Import and Premium Luxury. Its Domestic segment consists of retail automotive franchises that sell new vehicles manufactured by General Motors, Ford and FCA US. The Import segment consists of retail automotive franchises that sell new vehicles manufactured primarily by Toyota, Honda and Nissan. The Premium Luxury segment consists of retail automotive franchises that sell new vehicles manufactured by Mercedes-Benz, BMW, Audi and Lexus.

About Asbury Automotive Group

Asbury Automotive Group, Inc. is an automotive retailer in the United States. As of December 31, 2016, the Company owned and operated 93 new vehicle franchises, representing 28 brands of automobiles at 77 dealership locations, and 23 collision centers in the United States. In addition, as of December 31, 2016, it owned and operated two standalone used vehicle stores in Florida. Its stores offer automotive products and services, including new and used vehicles; parts and service, including vehicle repair and maintenance services, replacement parts, and collision repair services; and finance and insurance products, including arranging vehicle financing through third parties and aftermarket products, such as extended service contracts, guaranteed asset protection (GAP) insurance, prepaid maintenance, and credit life and disability insurance. Its new vehicle revenues include new vehicle sales and lease transactions arranged by dealerships with third-party financial institutions.

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