ABG to Acquire Herb Chambers: Is the Stock Worth Buying Now?

Group 1: Acquisition Details - Asbury Automotive Group (ABG) has agreed to acquire 33 dealerships, 52 car franchises, and three repair centers from The Herb Chambers Companies for $1.34 billion, expected to close by late Q2 2025 [1] - The acquisition will significantly enhance ABG's presence in the New England market and strengthen its position as a leading auto retailer in the U.S. [2] Group 2: Financial Performance - In the trailing 12-month period, ABG shares have increased by 38.7$3,661 [7] - The Parts & Service segment saw an 11% increase in same-store gross profit, with the high-margin Customer Pay segment up 13% in Q4 2024 [8] Group 3: Market Position and Valuation - ABG's shares are considered undervalued, with a Value Score of A, trading at a forward 12-month price/sales ratio of 0.34x compared to the sector's 1.68x [9] - The stock is currently trading above both the 50-day and 200-day moving averages, indicating a bullish trend [10] Group 4: Challenges and Estimates - ABG faces inventory constraints, particularly in the used vehicle segment, which may limit volume growth throughout 2025 [13] - The Zacks Consensus Estimate for ABG's Q1 2025 revenues is $4.3 billion, reflecting a year-over-year growth of 2.44$6.76, down 4.1% over the past 30 days [15] - For full-year 2025, revenues are estimated at $17.21 billion, indicating a growth of 0.13$26.80, down 0.7% [16]