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Why Is AutoNation (AN) Up 4.9% Since Last Earnings Report?
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A month has gone by since the last earnings report for AutoNation (AN - Free Report) . Shares have added about 4.9% 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 drivers.
AutoNation's Q1 Earnings Results Impress
AutoNation reported reported first-quarter 2021 adjusted earnings of $2.79 per share, skyrocketing 207% year over year and topping the Zacks Consensus Estimate of $1.80. The outperformance can be primarily attributed to higher-than-expected new and used vehicle sales. Operational efficiency also aided the bottom line. SG&A expenses as a percentage of gross profit were 62.7% for the quarter under review, marking a 1,120-basis point improvement from the corresponding period of 2020. For the reported quarter, AutoNation’s revenues amounted to $5,903.8 million, up 27% year over year. Further, the top line comfortably surpassed the Zacks Consensus Estimate of $5,061 million.
Importantly, AutoNation has inked a deal to buy 11 stores and a collision center from Peacock Automotive Group. The transaction, which is scheduled for closure by this summer, is set to add $380 million in the firm’s annual revenues. Encouragingly, the largest automotive retailer in the United States aims to sell 1 million combined new and pre-owned vehicles on an annual basis.
Key Takeaways
For the quarter under review, new-vehicle revenues soared 30.7% year over year to $2,982.3 million and surpassed the Zacks Consensus Estimate of $2,538 million. Used-vehicle revenues rose 40.1% from the year-ago figure to $1,749.1 million, handily beating the consensus mark of $1,452 million. Net revenues in the finance and insurance business amounted to $313 million, up from $235.8 million recorded in the year-ago quarter. Revenues from the parts and service business, however, slid 2.9% from the prior-year quarter to $851 million.
AutoNation intends to build in excess of 130 stand-alone pre-owned vehicle stores by 2026-end. It is on track to open five new stores by 2021-end in Phoenix, Austin, San Antonio and Denver. The automotive retailer has sharpened focus on ramping up digital capabilities in response to the changing buying behaviors of consumers amid the pandemic.
Segmental Details
Revenues in the Domestic segment soared 24.5% year over year to $1,846.7 million. The segment’s income jumped 119% year over year to $118.5 million for the quarter under review. The segment comprises stores that sell vehicles manufactured by General Motors, Ford and FCA US.
Revenues in the Import segment grew 29.9% from the prior-year quarter to $1,769.6 million. The segment’s income climbed 91% year over year to $125.9 million for the reported quarter. The segment consists of outlets that sell vehicles manufactured primarily by Toyota, Honda, Subaru, Hyundai and Nissan.
The Premium Luxury segment comprises stores that sell retail vehicles manufactured by Mercedes-Benz, BMW, Lexus, Jaguar Land Rover and Audi. Sales in the segment rose 30.1% from a year ago to $2,103.5 million. Segmental income also surged 97.6% year over year to $158.5 million for the reported quarter.
Financial Tidbits
AutoNation’s cash and cash equivalents were $350 million as of Mar 31, 2021. The company’s liquidity at year-end was $2.1 billion, including $1.8 billion in credit revolver. The firm’s inventory was valued at $2,254.6 million. At first quarter-end, non-vehicle debt was $1,798.4 million. Capital expenditure for the quarter amounted to $44.4 million.
During the reported quarter, bought back 3.8 million shares worth $306 million. now has $892 million remaining under the current share-repurchase authorization.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 34.57% 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 a D. 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise AutoNation has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Why Is AutoNation (AN) Up 4.9% Since Last Earnings Report?
A month has gone by since the last earnings report for AutoNation (AN - Free Report) . Shares have added about 4.9% 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 drivers.
AutoNation's Q1 Earnings Results Impress
AutoNation reported reported first-quarter 2021 adjusted earnings of $2.79 per share, skyrocketing 207% year over year and topping the Zacks Consensus Estimate of $1.80. The outperformance can be primarily attributed to higher-than-expected new and used vehicle sales. Operational efficiency also aided the bottom line. SG&A expenses as a percentage of gross profit were 62.7% for the quarter under review, marking a 1,120-basis point improvement from the corresponding period of 2020. For the reported quarter, AutoNation’s revenues amounted to $5,903.8 million, up 27% year over year. Further, the top line comfortably surpassed the Zacks Consensus Estimate of $5,061 million.
Importantly, AutoNation has inked a deal to buy 11 stores and a collision center from Peacock Automotive Group. The transaction, which is scheduled for closure by this summer, is set to add $380 million in the firm’s annual revenues. Encouragingly, the largest automotive retailer in the United States aims to sell 1 million combined new and pre-owned vehicles on an annual basis.
Key Takeaways
For the quarter under review, new-vehicle revenues soared 30.7% year over year to $2,982.3 million and surpassed the Zacks Consensus Estimate of $2,538 million. Used-vehicle revenues rose 40.1% from the year-ago figure to $1,749.1 million, handily beating the consensus mark of $1,452 million. Net revenues in the finance and insurance business amounted to $313 million, up from $235.8 million recorded in the year-ago quarter. Revenues from the parts and service business, however, slid 2.9% from the prior-year quarter to $851 million.
AutoNation intends to build in excess of 130 stand-alone pre-owned vehicle stores by 2026-end. It is on track to open five new stores by 2021-end in Phoenix, Austin, San Antonio and Denver. The automotive retailer has sharpened focus on ramping up digital capabilities in response to the changing buying behaviors of consumers amid the pandemic.
Segmental Details
Revenues in the Domestic segment soared 24.5% year over year to $1,846.7 million. The segment’s income jumped 119% year over year to $118.5 million for the quarter under review. The segment comprises stores that sell vehicles manufactured by General Motors, Ford and FCA US.
Revenues in the Import segment grew 29.9% from the prior-year quarter to $1,769.6 million. The segment’s income climbed 91% year over year to $125.9 million for the reported quarter. The segment consists of outlets that sell vehicles manufactured primarily by Toyota, Honda, Subaru, Hyundai and Nissan.
The Premium Luxury segment comprises stores that sell retail vehicles manufactured by Mercedes-Benz, BMW, Lexus, Jaguar Land Rover and Audi. Sales in the segment rose 30.1% from a year ago to $2,103.5 million. Segmental income also surged 97.6% year over year to $158.5 million for the reported quarter.
Financial Tidbits
AutoNation’s cash and cash equivalents were $350 million as of Mar 31, 2021. The company’s liquidity at year-end was $2.1 billion, including $1.8 billion in credit revolver. The firm’s inventory was valued at $2,254.6 million. At first quarter-end, non-vehicle debt was $1,798.4 million. Capital expenditure for the quarter amounted to $44.4 million.
During the reported quarter, bought back 3.8 million shares worth $306 million. now has $892 million remaining under the current share-repurchase authorization.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 34.57% 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 a D. 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise AutoNation has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.