Back to top

Image: Bigstock

AutoNation (AN) Down 5.4% Since Last Earnings Report: Can It Rebound?

Read MoreHide Full Article

A month has gone by since the last earnings report for AutoNation (AN - Free Report) . Shares have lost about 5.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is AutoNation due for a breakout? 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 Q3 Earnings & Revenues Miss Estimates

AutoNation reported adjusted earnings of $1.24 per share, missing the Zacks Consensus Estimate of $1.25. In the year-ago quarter, the bottom line was $1 per share.

Net income from continuing operations was $112 million compared with $98 million in third-quarter 2017.

During the quarter under review, AutoNation’s revenues declined 1.5% year over year to $5.35 billion. The top line also missed the Zacks Consensus Estimate of $5.57 billion.

During the reported quarter, new-vehicle revenues decreased 5.6% year over year to $2.9 billion in third-quarter 2018. Used-vehicle revenues rose 4.3% to $1.3 billion from the year-ago figure. Parts and service business revenues gained 2.7% to $864 million from third-quarter 2017. Net revenues from finance and insurance business were $247 million, reflecting rise of 2.4% from the prior-year quarter.

Segmental Details

Revenues at the Domestic segment — comprising stores that sell vehicles manufactured by General Motors, Ford and FCA US — declined 6.4% to $1.8 billion. The segment’s income decreased 2.6% to $67 million in the quarter under review.

Revenues at the Import segment — consisting of outlets that sell vehicles manufactured primarily by Toyota, Honda, Nissan and Hyundai — slumped 1.1% to $1.8 billion. However, the segment’s income gained 5.3% to $85 million in the reported quarter.

Revenues at the Premium Luxury segment comprise of stores that retail vehicles manufactured by Mercedes-Benz, BMW, Lexus, Jaguar Land Rover and Audi. The sales figure rose 2.1% to $1.7 billion. Segmental income declined 2.4% to $77 million in the reported quarter.

Balance Sheet and Capex

AutoNation’s cash and cash equivalents were $52.6 million as of Sep 30, 2018, declining from $69.2 million as of Dec 31, 2017. The company’s inventory was valued at $3.4 billion as of Sep 30, 2018, almost similar to the figure recorded as of Dec 31, 2017.

As of Mar 31, 2018, non-vehicle debt was $2.6 billion compared with $2.9 billion in the same period of 2017. At the end of third-quarter 2018, capital expenditure was $89 million compared with $56 million in the prior year.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -11.85% due to these changes.

VGM Scores

At this time, AutoNation has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. 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 A. 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.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


AutoNation, Inc. (AN) - free report >>

Published in