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AutoNation (AN) Up 6.8% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for AutoNation (AN - Free Report) . Shares have added about 6.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is AutoNation due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
AutoNation reported fourth-quarter 2023 adjusted earnings of $5.02 per share, which decreased 21.2% year over year but topped the Zacks Consensus Estimate of $4.85. This outperformance can be primarily attributed to higher-than-expected new vehicle and parts and service business revenues. In the reported quarter, revenues amounted to $6.8 billion, surpassing the Zacks Consensus Estimate of $6.65 billion. The company had recorded revenues of $6.7 billion in the fourth quarter of 2022. Revenues across the Import and Premium Luxury segment topped our projections.
Key Takeaways
In the reported quarter, new vehicle revenues were up 7% year over year to $3.4 billion and also exceeded our estimate of $3 billion on the back of stronger-than-expected volumes. New vehicle retail units sold totaled 64,748 units, topping our projection of 57,968 units. Average selling price (ASP) per new vehicle unit retailed came in at $52,000, down 0.8% year over year. Gross profit from the segment came in at $236.5 million, declining 30.1% year over year but marginally topping our estimate of $234.2 million.
Used-vehicle revenues contracted 12.1% from the year-ago figure to $1.9 billion and lagged our projection of $2.1 billion on lower-than-expected volumes. Used vehicle retail units sold totaled 65,151 units, missing our projection of 66,119 units. ASP per used vehicle unit retailed came in at $27,338, declining 8.2% year over year. Gross profit from the segment came in at $91.5 million, down 22.5% and lagging our projection of $121.8 million.
Net revenues in the finance and insurance business amounted to $347.4 million, which increased 0.6% from the year-ago quarter but missed our projection of $378 million. Gross profit was $347.4 million, up 0.6%. However, it missed our estimate of $378 million.
Revenues from the parts and service business rose 10.9% to $1.14 billion, topping our forecast of $1.08 billion. Gross profit from this segment came in at $539.9 million, rising 12.7% year over year and beating our estimate of $508.6 million.
Segmental Details
Revenues from the Domestic segment declined 4.1% year over year to $1.8 billion and lagged our projection of $1.88 billion. The segment’s income declined 38.5% to $73.9 million, missing our estimate of $98.1 million.
Revenues from the Import segment rose 6.6% from the prior-year quarter to $2 billion and outpaced our forecast of $1.91 billion. The segment’s income contracted 21.9% to $136.9 million and missed our projection of $143.1 million.
The Premium Luxury segment sales moved down 1.2% to $2.64 billion, outpacing our projection of $2.5 billion. The segmental income declined 20.9% year over year to $195.3 million in the reported quarter but topped our estimate of $188.7 million.
Financial Tidbits
AutoNation’s cash and cash equivalents were $60.8 million as of Dec 31, 2023, declining from $72.6 million recorded as of Dec 31, 2022. The company’s liquidity was $1.5 billion, including $61 million in cash and nearly $1.46 billion available under its revolving credit facility.
The firm’s inventory was valued at $3.03 billion. At the end of the fourth quarter, non-vehicle debt was $4.03 billion, which increased from $3.65 billion recorded as of 2022 end. Capital expenditure in the quarter amounted to $124.3 million.
During the fourth quarter of 2023, AutoNation repurchased 1.15 million shares of common stock for an aggregate purchase price of $151.2 million. As of Feb 9, 2024, AutoNation had approximately $320 million shares remaining under its buyback authorization.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
Currently, AutoNation has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, AutoNation has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
AutoNation belongs to the Zacks Automotive - Retail and Whole Sales industry. Another stock from the same industry, Penske Automotive (PAG - Free Report) , has gained 2.5% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Penske reported revenues of $7.27 billion in the last reported quarter, representing a year-over-year change of +3.7%. EPS of $3.45 for the same period compares with $4.21 a year ago.
Penske is expected to post earnings of $3.44 per share for the current quarter, representing a year-over-year change of -20.2%. Over the last 30 days, the Zacks Consensus Estimate has changed +2.9%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Penske. Also, the stock has a VGM Score of C.
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AutoNation (AN) Up 6.8% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for AutoNation (AN - Free Report) . Shares have added about 6.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is AutoNation due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
AutoNation Q4 Earnings Beat Expectations, Decline Y/Y
AutoNation reported fourth-quarter 2023 adjusted earnings of $5.02 per share, which decreased 21.2% year over year but topped the Zacks Consensus Estimate of $4.85. This outperformance can be primarily attributed to higher-than-expected new vehicle and parts and service business revenues. In the reported quarter, revenues amounted to $6.8 billion, surpassing the Zacks Consensus Estimate of $6.65 billion. The company had recorded revenues of $6.7 billion in the fourth quarter of 2022. Revenues across the Import and Premium Luxury segment topped our projections.
Key Takeaways
In the reported quarter, new vehicle revenues were up 7% year over year to $3.4 billion and also exceeded our estimate of $3 billion on the back of stronger-than-expected volumes. New vehicle retail units sold totaled 64,748 units, topping our projection of 57,968 units. Average selling price (ASP) per new vehicle unit retailed came in at $52,000, down 0.8% year over year. Gross profit from the segment came in at $236.5 million, declining 30.1% year over year but marginally topping our estimate of $234.2 million.
Used-vehicle revenues contracted 12.1% from the year-ago figure to $1.9 billion and lagged our projection of $2.1 billion on lower-than-expected volumes. Used vehicle retail units sold totaled 65,151 units, missing our projection of 66,119 units. ASP per used vehicle unit retailed came in at $27,338, declining 8.2% year over year. Gross profit from the segment came in at $91.5 million, down 22.5% and lagging our projection of $121.8 million.
Net revenues in the finance and insurance business amounted to $347.4 million, which increased 0.6% from the year-ago quarter but missed our projection of $378 million. Gross profit was $347.4 million, up 0.6%. However, it missed our estimate of $378 million.
Revenues from the parts and service business rose 10.9% to $1.14 billion, topping our forecast of $1.08 billion. Gross profit from this segment came in at $539.9 million, rising 12.7% year over year and beating our estimate of $508.6 million.
Segmental Details
Revenues from the Domestic segment declined 4.1% year over year to $1.8 billion and lagged our projection of $1.88 billion. The segment’s income declined 38.5% to $73.9 million, missing our estimate of $98.1 million.
Revenues from the Import segment rose 6.6% from the prior-year quarter to $2 billion and outpaced our forecast of $1.91 billion. The segment’s income contracted 21.9% to $136.9 million and missed our projection of $143.1 million.
The Premium Luxury segment sales moved down 1.2% to $2.64 billion, outpacing our projection of $2.5 billion. The segmental income declined 20.9% year over year to $195.3 million in the reported quarter but topped our estimate of $188.7 million.
Financial Tidbits
AutoNation’s cash and cash equivalents were $60.8 million as of Dec 31, 2023, declining from $72.6 million recorded as of Dec 31, 2022. The company’s liquidity was $1.5 billion, including $61 million in cash and nearly $1.46 billion available under its revolving credit facility.
The firm’s inventory was valued at $3.03 billion. At the end of the fourth quarter, non-vehicle debt was $4.03 billion, which increased from $3.65 billion recorded as of 2022 end. Capital expenditure in the quarter amounted to $124.3 million.
During the fourth quarter of 2023, AutoNation repurchased 1.15 million shares of common stock for an aggregate purchase price of $151.2 million. As of Feb 9, 2024, AutoNation had approximately $320 million shares remaining under its buyback authorization.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
Currently, AutoNation has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, AutoNation has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
AutoNation belongs to the Zacks Automotive - Retail and Whole Sales industry. Another stock from the same industry, Penske Automotive (PAG - Free Report) , has gained 2.5% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Penske reported revenues of $7.27 billion in the last reported quarter, representing a year-over-year change of +3.7%. EPS of $3.45 for the same period compares with $4.21 a year ago.
Penske is expected to post earnings of $3.44 per share for the current quarter, representing a year-over-year change of -20.2%. Over the last 30 days, the Zacks Consensus Estimate has changed +2.9%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Penske. Also, the stock has a VGM Score of C.