Saj Karsan

Auto Retailers' Ability to Pay Debt - What It Means

Hi Falcon,

Regarding Buffett and Carmax, I'd encourage you to check out this article over at Fortune: money.cnn.com/2007/11/...

Asbury Automotive Travels on Dangerous Ground

Hi JG,

I agree the repair work should keep them more stable than otherwise, but in Asbury's case only just over 10% of their revenue comes from this.

By financial commitments I mean their debt. With interest coverage of only two times, I'm worried about them being able to make payments if times get tough. That doesn't even include the capitalization of their operating leases (another commitment of theirs), which are almost as large as their total equity.

I'll take a look at Sonic and Group 1 when I get a chance, thanks for the notes.

Asbury Automotive Travels on Dangerous Ground

You're right JG that parts/service revenues should help shield some of these companies from the downturn. In Asbury's case though, their financial commitments are tight, so if things deteriorate there's trouble for this stock, so it may not be worth the risk. What are some of the other auto retailers you like?

Asbury Automotive Travels on Dangerous Ground

Thanks Barbarossa,

Fortunately you are right about there being other opportunities out there!

Asbury Automotive Travels on Dangerous Ground

That's a good idea...it's very important to do your due diligence on analysts. Furthermore, I would encourage you to read up on the company yourself, and decide whether what the analyst is saying makes any sense.