Critical Comparison: AutoNation (NYSE:AN) vs. Asbury Automotive Group (NYSE:ABG)

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

Institutional and Insider Ownership

94.6% of AutoNation shares are held by institutional investors. 0.7% of Asbury Automotive Group shares are held by insiders. Comparatively, 1.4% of AutoNation shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Asbury Automotive Group and AutoNation”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Asbury Automotive Group	$18.00 billion	0.21	$492.00 million	$25.06	8.24
AutoNation	$27.63 billion	0.21	$649.10 million	$20.81	8.86

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.

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Asbury Automotive Group	2	5	3	0	2.10
AutoNation	1	5	7	0	2.46

Asbury Automotive Group currently has a consensus target price of $222.88, suggesting a potential upside of 7.92%. AutoNation has a consensus target price of $228.20, suggesting a potential upside of 23.75%. Given AutoNation’s stronger consensus rating and higher probable upside, analysts clearly believe AutoNation is more favorable than Asbury Automotive Group.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Asbury Automotive Group	2.66%	11.85%	4.09%
AutoNation	2.63%	31.18%	4.72%

Volatility & Risk

Asbury Automotive Group has a beta of 0.78, indicating that its stock price is 22% less volatile than the S&P 500. Comparatively, AutoNation has a beta of 0.82, indicating that its stock price is 18% less volatile than the S&P 500.

Summary

AutoNation beats Asbury Automotive Group on 12 of the 14 factors compared between the two stocks.

About Asbury Automotive Group

Asbury Automotive Group is a U.S. automotive retailer that operates franchised new- and used-vehicle dealerships. Its dealerships sell vehicles from a range of manufacturers and offer related services, including vehicle financing and insurance products, maintenance and repairs, parts sales, and collision repair. The company also operates Clicklane, a digital platform that lets customers research, purchase, finance, and arrange delivery of vehicles online. Asbury was founded in 1995 and has expanded through acquisitions, including its 2021 purchase of Larry H. Miller Dealerships.

About AutoNation

AutoNation, Inc. is a U.S. automotive retailer that sells new and used vehicles through a network of dealerships. Its stores offer vehicles from a range of manufacturers, along with related products and services. The company also provides vehicle maintenance and repair, parts, and collision-repair services. Its offerings include financing and insurance products, as well as online tools that support vehicle research and purchasing. Founded in 1996, AutoNation operates dealerships across the United States, with a presence concentrated in the Sun Belt.