ABG Q2 Earnings Beat on Used-Vehicle Gains, Revenues Miss

ABG's Revenue Mix

New-vehicle revenues increased 1% year over year to $2.33 billion, while used retail revenues declined 3% to $1.09 billion. Wholesale used-vehicle revenues fell 9% to $141.9 million, leaving total used-vehicle revenues down 4% at $1.24 billion.

Parts and service revenues advanced 6% to $634.6 million, while finance and insurance revenues edged up 1% to $183.8 million. The revenue mix shifted modestly toward parts and service, which represented 14.5% of total revenues compared with 13.8% a year earlier.

Asbury's Vehicle Economics

New-vehicle unit sales were nearly flat at 44,245 units. Luxury and import sales increased 6% and 5%, respectively, but domestic unit sales declined 15%. The average new-vehicle selling price rose 2% to $52,666. Despite the pricing gain, new-vehicle gross profit fell 14% to $138.2 million as gross profit per unit declined 13% to $3,124.

Used retail unit sales decreased 9% to 33,098, while the average selling price increased 6% to $33,054. Used retail gross profit rose 6% to $66.2 million, supported by the 16% improvement in gross profit per unit. Wholesale gross profit dropped 54% to $3.1 million.

Parts and service gross profit increased 5% to $374.2 million, making it the company’s largest gross profit contributor. Finance and insurance gross profit rose 2% to $171.4 million, with gross profit per vehicle retailed increasing 6% to $2,216.

Total gross profit was $753.1 million, essentially flat year over year, while gross margin remained at 17.2%.

ABG's Same-Store Operations Remain Soft

Same-store revenues declined 7% to $3.76 billion, while same-store gross profit decreased 7% to $643.2 million.

New-vehicle unit sales fell 6% to 38,908, and used retail unit sales declined 14% to 28,821.

Same-store new-vehicle gross profit per unit dropped 18% to $2,896. In contrast, used retail gross profit per unit increased 10% to $1,927, and finance and insurance gross profit per vehicle retailed rose 5% to $2,214. Same-store parts and service gross profit declined 1% to $322.8 million.

Other Tidbits

Selling, general and administrative expenses rose 7% to $506.4 million. Adjusted SG&A increased 4% to $496.7 million and represented 66% of gross profit, compared with 63.6% in the year-ago quarter.

Income from operations declined 15% to $219.5 million. Adjusted operating margin contracted to 5.3% from 5.8%, while adjusted EBITDA decreased to $234.8 million from $255.8 million. The results reflected higher expenses and weaker new-vehicle economics.

The company generated $305.2 million of adjusted operating cash flow during the first half of 2026 and reported adjusted free cash flow of $188 million. It ended June with $966 million of liquidity and a transaction-adjusted net leverage ratio of 3.4 times.

ABG repurchased about 668,000 shares for $131 million during the quarter. Year to date, it bought back roughly 1.35 million shares for $278 million, leaving approximately $322 million under its authorization.

Asbury currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Asbury Advances Its Tekion Rollout

Asbury had converted 70% of its stores to the Tekion dealership management system as of July 28 and expects to complete the rollout in fall. Management noted stronger productivity, customer-pay performance, technician efficiency and sales effectiveness in markets that had used the platform for at least five months.

In June, the Koons, Georgia and Florida stores increased average units per salesperson by 12% and dollars per technician by 10%. Management expects the platform to support better operating efficiency and is targeting same-store adjusted SG&A as a percentage of gross profit in the low-60% range by the end of 2027.

Key Releases From the Auto Space

General Motors GM reported second-quarter 2026 adjusted earnings of $3.57 per share, up 41.3% year over year. The figure beat the Zacks Consensus Estimate of $3.13 by 14.06%. Revenues increased 1.9% to $48.03 billion and surpassed the consensus estimate of $46.56 billion by 3.15%. Strong pricing, lower costs and disciplined incentives supported results. General Motors raised its full-year adjusted EBIT guidance to $14-$16 billion from $13.5-$15.5 billion. Adjusted earnings are now projected at $12-$14 per share, up from the prior range of $11.50-$13.50.

Tesla TSLA reported second-quarter 2026 adjusted earnings of 33 cents per share, which declined 17.5% year over year. The figure missed the Zacks Consensus Estimate of 50 cents by 34%. Revenues advanced 25.5% to $28.24 billion and surpassed the consensus estimate of $25.81 billion by 9.41%. Tesla expects 2026 capital expenditures to exceed $25 billion and rise further over the next two to three years. 

Genuine Parts GPC reported second-quarter 2026 adjusted earnings of $2.15 per share, beating the Zacks Consensus Estimate of $2.10 by 2.38%. The bottom line increased 2.4% from $2.10 in the year-ago quarter. Revenues rose 6% year over year to $6.54 billion and surpassed the consensus estimate of $6.39 billion by 2.36%. Genuine Parts reaffirmed its 2026 adjusted earnings guidance of $7.50-$8 per share and total sales growth outlook of 3-5.5%. Genuine Parts ended June with $2.3 billion of liquidity, including $559 million in cash.

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