Asbury Automotive Group (ABG) Stock Jumps As Q3 Earnings Mask Leverage Risk

Asbury Automotive Group just ripped higher, with the stock jumping 12.7% in regular trading to close near US$195 after its Q3 2026 release. That is a sharp move for an auto retailer that had drifted over the past quarter.

The headlines look muscular. Revenue printed at US$4.4b and basic earnings per share came in at US$5.84, with management highlighting even higher adjusted profit once Tekion and Total Care Auto accounting noise is stripped back. Traders reacted to the snap of near term numbers. Long term investors are now weighing those figures against leverage sitting at 3.5x net and the multiyear plan to bring it down.

If you like the revenue and profit beat from Asbury Automotive Group but feel uneasy about leverage sitting at 3.5x net, consider screening for businesses that pair solid earnings power with sturdier balance sheets using our list of solid balance sheet and fundamentals stocks (24 results).

Q3 2026 Earnings Summary

• Revenue (Q3 2026 vs. Q3 2025): US$4,413.6m vs. US$4,800.9m (declined 8.1%)

• Net Income (Excl. Extra Items, Q3 2026 vs. Q3 2025): US$105.1m vs. US$147.1m (fell 28.5%)

• Basic EPS (Q3 2026 vs. Q3 2025): US$5.84 vs. US$7.54 (down 22.6%)

• Same Store Sales Growth (Q3 2026 vs. Q3 2025): Not disclosed vs. 8% growth (comparison not available for the current quarter)

If you prefer clean, visual charts instead of reading line after line of raw figures and footnotes, take a look at our company report for Asbury Automotive Group. for a comprehensive view of Asbury Automotive Group’s valuation.

Asbury’s Bull Case Hangs On Tekion And Fixed Ops Proof

Optimists argue Asbury Automotive Group can translate its tech rollout and service focus into a different earnings profile over time.

“Certain analysts expect Asbury Automotive Group to translate the Tekion rollout, portfolio reshaping and fixed operations focus into efficiency gains, higher quality gross profit and changes in earnings power over the next several years.”

Q3 shows early evidence rather than full delivery. Tekion is live across all stores, which is a clear milestone. Early markets show customer pay gross up 7% and better output per adviser and technician, yet same store adjusted SG&A still sits at 67% of gross. Fixed operations are growing customer pay revenue, but gross profit is flat, so the efficiency story is only partly visible so far.

Not everyone reads the same price the same way. → See the higher figure this Narrative lands on, and how it gets there.

Asbury Bear Case: Efficiency Promise, SG&A Reality

Bearish investors worry Asbury Automotive Group will not squeeze enough cost savings from Tekion to offset higher debt and a tougher auto cycle.

“However, the current phase of duplicated DMS expense and store disruption that is expected to peak around Q3 2026 increases the risk that integration drags on longer than planned and keeps operating margins and EPS below the glidepath investors are using.”

Q3 results lean toward that concern. Same store adjusted SG&A remains at 67% of gross, even as Tekion runs across all stores and customer pay revenue inches ahead while gross profit is flat. Adjusted EPS of US$6.16, or US$6.85 excluding TCA, arrived with net leverage at 3.5x, so the efficiency milestone is not yet visible in margins or debt progress.

Hunt Quiet Mispricings In Plain View

Asbury Automotive Group just showed how a single quarter can reshape the debate around a business. The real opportunity is finding stocks that could be undervalued before the market closes the gap.

• Company 1 – 32% below our estimate – target higher margin contracts as operational programs lift factory efficiency and expand aftermarket service work tied to long-life power assets.

• Company 2 – 42% below our estimate – deepen relationships with large digital merchants that route rising transaction volumes through higher margin local payout and automated settlement products.

• Company 3 – 31% below our estimate – convert record engineering program wins into recurring production work for complex hardware used in tightly regulated industrial and aerospace systems.

That is three of the list. See all 29 potentially undervalued companies →

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include ABG.

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