Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Georgia's Asbury Automotive Group
So what: On an adjusted basis, Asbury's fourth-quarter earnings per share jumped 46%, to $0.54. Total revenue for the quarter was up just 8% year over year to $1.1 billion, but used vehicle operations shone, climbing 21% with an 18% increase in same-store revenue. Used car sales accounted for 28% of the company's total revenue for the quarter compared to 56% for new cars, but used car sales were more profitable for the company.
For the quarter, Wall Street analysts had been expecting earnings per share of $0.43 on revenue of $1.09 billion.
Now what: Fearful consumers are consumers less likely to make a big outlay -- or a big finance commitment -- for a new car, whether that new car is truly new or just new to that particular buyer. The success of used cars for Asbury underscores this point as consumers that are in need of a car are more likely opting for the lower prices they can get on used cars. The numbers look good for Asbury today, but they could look even better if the economy continues to improve.
In the meantime, selling more used cars might be a good thing for Asbury. While used cars are slightly more profitable than new cars, parts and services are far more profitable than either and older cars on the road could mean more business for that arm of the company.
Want to keep up to date on Asbury Automotive Group? Add it to your watchlist.
The Motley Fool owns shares of Asbury Automotive Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.