Autonation, Inc.

Autonation, Inc. (AN - Analyst Report) has been on a big-time rally for the last 9 months, recently topping off above $21 and moving within striking distance of the all-time high.

Company Description

Autonation, Inc., through its subsidiaries, operates as an automotive retailer in the United States. The company was founded in 1991 and has a market cap of $3.4 billion.

The auto industry has been in the spotlight for the last 18 months for all of the wrong reasons. Major players like GM and Chrysler have required massive government bailouts as the consumer environment has weakened considerably due to rising unemployment and economic uncertainty.

But some car dealers are hanging tough, adjusting their strategies and managing costs to drive profitability. These 2 forces helped Autonation produce solid second-quarter results, reported on July 31.

Second-Quarter Results

Sales took a hit, down to $2.61 billion from $3.66 billion last year. But earnings came in ahead of expectations at 29 cents per share, 5 cents better than the Zacks Consensus Estimate.

Looking ahead, the company said is expects a gradual improvement in sales in the second half of 2009 and expects to increase its inventories to respond to higher demand.

CEO Speak

CEO Mike Jackson added that "The industry in now positioned for a healthy rebound when macroeconomic conditions, particularly consumer credit, improve."

Analysts Guide Higher

The analysts liked what they saw, with the current year adding 11 cents and climbing $1.05 per share. The next-year estimate is pegged at $1.22, a bullish 17% growth projection.

Valuation

Based on the current-year estimate, this stock has a P/E multiple of 18X, in line with the overall market.

The Chart

Shares of AN have been surging for the last 10 months after bottoming just below $5 in October of last year. More recently this stock topped off above $21, within striking distance of the all-time high just above $23. Take a look at the big rally below.

Read the full analyst report on AN