Why Asbury Automotive Shares Jumped

Why Asbury Automotive Shares Jumped

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 Asbury Automotive Group were revving up today, gaining as much as 15% after posting a strong earnings report.

So what: The auto dealership chain beat on both top and bottom lines, posting EPS of $0.98 against expectations of $0.81 and revenue up 15.8% to $1.34 billion, better than estimates at $1.29 billion. Used-vehicle sales were especially strong, climbing 25%, and net income rose 28%, sending shares to a record high. CEO Craig Monaghan credited the recovery in the automotive market as well as the efforts of his sales and services teams for the strong quarter.

Now what: There's nothing particularly complicated here. As Monaghan said, auto sales continue to climb back as the economy recovers, meaning good news for retailers like Asbury. Shares cooled off after the morning jump, finishing up 4%. Still, I'd expect analysts to boost their estimates as this is the fourth quarter in a row that Asbury has solidly passed expectations. As the economy continues to improve, look for this upward swing to continue.

Asbury isn't the only smart play in the auto industry. If you're looking for some new ideas, look at China. It's already the world's largest auto market -- and it's set to grow even bigger in coming years. A recent Motley Fool report, "2 Automakers to Buy for a Surging Chinese Market," names two global giants poised to reap big gains that could drive big rewards for investors. You can read this report right now for free -- just click here for instant access.

The article Why Asbury Automotive Shares Jumped originally appeared on Fool.com.

Fool contributor Jeremy Bowman has no position in any stocks mentioned. 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. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.