Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model. NEW YORK ( TheStreet) -- Asbury Automotive Group (NYSE: ABG) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, revenue growth and notable return on equity. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
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- Powered by its strong earnings growth of 42.59% and other important driving factors, this stock has surged by 65.75% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ABG should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- ASBURY AUTOMOTIVE GROUP INC has improved earnings per share by 42.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, ASBURY AUTOMOTIVE GROUP INC increased its bottom line by earning $2.64 versus $1.42 in the prior year. This year, the market expects an improvement in earnings ($3.12 versus $2.64).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Specialty Retail industry. The net income increased by 84.7% when compared to the same quarter one year prior, rising from $17.60 million to $32.50 million.
- ABG's revenue growth trails the industry average of 25.9%. Since the same quarter one year prior, revenues rose by 14.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Specialty Retail industry and the overall market, ASBURY AUTOMOTIVE GROUP INC's return on equity exceeds that of both the industry average and the S&P 500.
-- Written by a member of TheStreet Ratings Staff