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Why Is AutoNation (AN) Down 9% Since the Last Earnings Report?
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A month has gone by since the last earnings report for AutoNation, Inc. (AN - Free Report) . Shares have lost about 9% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
AutoNation Q1 Earnings Beat Expectations, Sales Miss
AutoNation reported earnings of $0.97 per share in first-quarter 2017, which increased from $0.90 in the first quarter of 2016. Earnings also surpassed the Zacks Consensus Estimate of $0.91.
Net income rose to $98.1 million from $95.9 million in first-quarter 2016. However, operating income inched down 0.3% to $206.7 million from $207.4 million a year ago.
AutoNation reported revenues of $5.14 billion, up 0.4% year over year. However, revenues fell short of the Zacks Consensus Estimate of $5.31 billion.
New vehicle revenues were relatively in line at $2.8 billion, despite a 4.1% fall in new vehicle sales to 75,798 units. Revenues per vehicle retailed went up 4.1% to $36,890. On a same-store basis, new vehicle revenues declined 0.6% to $2.7 billion.
Used vehicle (retail and wholesale) revenues were also almost flat year over year at $1.24 billion, with a 3.2% rise in the retail sector and 30.3% decline in the wholesale sector. Retail unit sales rose 4.3% to 60,608 vehicles, while revenues per vehicle retailed fell 1% to $19,075. On a same-store basis, used vehicle revenues improved 0.3% to $1.21 billion.
Revenues at the parts and service business advanced 3% to $845.1 million in the reported quarter. Meanwhile, the finance and insurance business recorded a 0.7% decrease in revenues to $221.6 million.
Segment Details
Revenues at the Domestic segment — comprising stores that sell vehicles manufactured by General Motors, Ford and others — declined 2.6% to $1.8 billion as retail new vehicle sales fell 5.3% to 26,259 units. The segment’s income fell 20.7% to $61.4 million in the quarter under review.
Revenues at the Import segment — consisting of stores that sell vehicles manufactured primarily by Toyota and other Japanese automakers — dipped 2.6% to $1.63 billion owing to a 4.1% fall in retail new vehicle unit sales to 34,315 automobiles. Segment income decreased 5.8% to $71.7 million in the reported quarter.
Revenues at the Premium Luxury segment — consisting of stores that sell vehicles manufactured primarily by Mercedes, BMW and Lexus — rose 5% to $1.62 billion. Retail new vehicle sales descended 1.7% to 15,224 luxury units. The segment's income declined 3% to $80.5 million in the reported quarter.
Balance Sheet and Capex
AutoNation’s cash and cash equivalents rose to $56.3 million as of Mar 31, 2017, from $47.8 million as of Mar 31, 2016. The company’s inventory was valued at $3.69 billion as of Mar 31, 2017 compared with $3.93 billion as of Mar 31, 2016.
Non-vehicle debt decreased to $2.55 billion from $2.68 billion as of Mar 31, 2016. Capital expenditures were $86.8 million in first-quarter 2017 compared with $50.7 million in the prior-year period.
Share Repurchases
In first-quarter 2017, the company did not repurchase any shares. As of Apr 25, 2017, AutoNation had approximately $299 million remaining under its share repurchase program and around 101 million shares outstanding.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been ten downward revisions for the current quarter compared to three upward.
At this time, AutoNation's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with a 'D'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Why Is AutoNation (AN) Down 9% Since the Last Earnings Report?
A month has gone by since the last earnings report for AutoNation, Inc. (AN - Free Report) . Shares have lost about 9% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
AutoNation Q1 Earnings Beat Expectations, Sales Miss
AutoNation reported earnings of $0.97 per share in first-quarter 2017, which increased from $0.90 in the first quarter of 2016. Earnings also surpassed the Zacks Consensus Estimate of $0.91.
Net income rose to $98.1 million from $95.9 million in first-quarter 2016. However, operating income inched down 0.3% to $206.7 million from $207.4 million a year ago.
AutoNation reported revenues of $5.14 billion, up 0.4% year over year. However, revenues fell short of the Zacks Consensus Estimate of $5.31 billion.
New vehicle revenues were relatively in line at $2.8 billion, despite a 4.1% fall in new vehicle sales to 75,798 units. Revenues per vehicle retailed went up 4.1% to $36,890. On a same-store basis, new vehicle revenues declined 0.6% to $2.7 billion.
Used vehicle (retail and wholesale) revenues were also almost flat year over year at $1.24 billion, with a 3.2% rise in the retail sector and 30.3% decline in the wholesale sector. Retail unit sales rose 4.3% to 60,608 vehicles, while revenues per vehicle retailed fell 1% to $19,075. On a same-store basis, used vehicle revenues improved 0.3% to $1.21 billion.
Revenues at the parts and service business advanced 3% to $845.1 million in the reported quarter. Meanwhile, the finance and insurance business recorded a 0.7% decrease in revenues to $221.6 million.
Segment Details
Revenues at the Domestic segment — comprising stores that sell vehicles manufactured by General Motors, Ford and others — declined 2.6% to $1.8 billion as retail new vehicle sales fell 5.3% to 26,259 units. The segment’s income fell 20.7% to $61.4 million in the quarter under review.
Revenues at the Import segment — consisting of stores that sell vehicles manufactured primarily by Toyota and other Japanese automakers — dipped 2.6% to $1.63 billion owing to a 4.1% fall in retail new vehicle unit sales to 34,315 automobiles. Segment income decreased 5.8% to $71.7 million in the reported quarter.
Revenues at the Premium Luxury segment — consisting of stores that sell vehicles manufactured primarily by Mercedes, BMW and Lexus — rose 5% to $1.62 billion. Retail new vehicle sales descended 1.7% to 15,224 luxury units. The segment's income declined 3% to $80.5 million in the reported quarter.
Balance Sheet and Capex
AutoNation’s cash and cash equivalents rose to $56.3 million as of Mar 31, 2017, from $47.8 million as of Mar 31, 2016. The company’s inventory was valued at $3.69 billion as of Mar 31, 2017 compared with $3.93 billion as of Mar 31, 2016.
Non-vehicle debt decreased to $2.55 billion from $2.68 billion as of Mar 31, 2016. Capital expenditures were $86.8 million in first-quarter 2017 compared with $50.7 million in the prior-year period.
Share Repurchases
In first-quarter 2017, the company did not repurchase any shares. As of Apr 25, 2017, AutoNation had approximately $299 million remaining under its share repurchase program and around 101 million shares outstanding.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been ten downward revisions for the current quarter compared to three upward.
AutoNation, Inc. Price and Consensus
AutoNation, Inc. Price and Consensus | AutoNation, Inc. Quote
VGM Scores
At this time, AutoNation's stock has a strong Growth Score of 'A', though it is lagging a lot on the momentum front with a 'D'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'A'. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks' style scores indicate that the stock is suitable for value and growth investors.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.