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Bear of the Day: Autonation (AN)

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There’s been a lot of attention put on auto sales recently. We’ve started to see a bit of a downtick in sales while rates are beginning to move to the upside. Add to that a ton of cars which are coming back on leases and putting pressure on used car prices and you’re starting to see there may be some storms on the horizon. Today’s Bear of the Day is an auto dealership who has been experiencing some pressure.

AutoNation (AN - Free Report) operates as an automotive retailer in the United States. The company operates in three segments: Domestic, Import, and Premium Luxury. It offers a range of automotive products and services, including new and used vehicles; and parts and services, such as automotive repair and maintenance services, and wholesale parts and collision services. The company also provides automotive finance and insurance products comprising vehicle services and other protection products, and arrangement of finance for vehicle purchases through third-party finance sources. 

It looks like this year is going to be a little tough to get through for AutoNation. The current quarter EPS estimates are projecting a 14.75% contraction in earnings. This year looks like it’s going to round out at an 8.71% contraction. This contraction is coming on revenue growth of only 1.08%.

Seven analysts have come out and dropped their EPS estimates for the current year and next year over the last week. The bearish revisions have cut the current year Zacks Consensus Estimate from $3.92 down to $3.73. Next year’s consensus has also come down, going from $4.30 down to $4.04.

The stock came under serious pressure after rallying up over $53 in January of this year. From there, the stock took a nasty tumble, getting down under $39 this spring. Since then, the stock has been bouncing around in a trading range from $39 to $43. The 50-day moving average is providing some upside resistance just above the current price at $41.10.

Investors looking for other stocks in the same industry should check out Zacks Rank #1 (Strong Buy) Rush Enterprises RUSHA. There are a few others like Lithia Motors LAD, Penske Automotive PAG and Titan Machinery TITN which are currently Zacks Rank #3 (Hold) stocks.

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