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AutoNation's (AN) Q4 Earnings Beat Estimates, Sales Surge

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AutoNation Inc. (AN - Free Report) reported fourth-quarter 2021 adjusted earnings of $5.76 per share, skyrocketing 137% year over year from $2.43 and topping the Zacks Consensus Estimate of $5. This outperformance can be primarily attributed to the higher-than-expected profits from the new and used vehicle units.

In the reported quarter, revenues amounted to $6,582.3 million, up 13.8% year over year. The top line also crossed the Zacks Consensus Estimate of $6,386.6 million.

Key Takeaways

In the quarter, new-vehicle revenues inched down 6.7% year over year to $2,917.3 million but topped the Zacks Consensus Estimate of $2,908 million. Gross profit from the segment came in at $371.5 million, up from $200.9 million reported in the prior-year quarter and beating the consensus mark of $316 million.

The used-vehicle revenues also rose 55.1% from the year-ago figure to $2,343.6 million, beating the consensus mark of $2,211 million. Gross profit from the segment came in at $168.2 million, up from $104.1 million and marginally beating the consensus mark of $167 million.

Net revenues in the finance and insurance business amounted to $353.6 million, up from $295.9 million recorded in the year-ago quarter, and beating the consensus mark of $349 million. Revenues from the parts and service business rose 14.6% to $961.1 million.

The company opened its ninth USA store in November in Phoenix, AR, and most recently entered a new market with its 10th AutoNation USA store in Charlotte, NC. It is also on track to open 12 new additional stores in 2022.

Segmental Details

Revenues in the Domestic segment were up 13.8% year over year to $2,033.2 million. The segment’s income jumped 49% to $159 million in the reported quarter.

Revenues in the Import segment grew 11.4% from the prior-year quarter to $1,870.6 million. The segment’s income also climbed 70% to $184 million.

Sales in Premium Luxury segment rose 13.4% to $2,439.9 million. The segmental income also surged 50% year over year to $247 million in the reported quarter.

Financial Tidbits

The adjusted SG&A expenses as a percentage of gross profit were 56.7% in the quarter, marking a 710-basis point expansion from the corresponding period of 2020.

AutoNation’s cash and cash equivalents were $60.4 million as of Dec 31, 2021, a sharp dive from $569.6 million in the year-ago period. The company’s liquidity at year-end was $1.5 billion, including $60 million in cash and nearly $1.4 billion available under its revolving credit facility. The firm’s inventory was valued at $1,847.9 million. At the end of the fourth quarter, non-vehicle debt was $3,198.4 million. Capital expenditure in the quarter amounted to $65.7 million.

During the fourth quarter, AutoNation repurchased 3.1 million shares of common stock for an aggregate purchase price of $382 million. It has around $776 million remaining for share buyback under current authorization.

Zacks Rank & Other Key Picks

Currently, AN has a Zacks Rank #2 (Buy).

Other top-ranked players in the auto space include Tesla (TSLA - Free Report) , sporting a Zacks Rank #1 (Strong Buy) and Dorman Products (DORM - Free Report) and Standard Motor Products (SMP - Free Report) , each carrying a Zacks Rank #2 currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Tesla has an expected earnings growth rate of 40.7% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised around 22.3% upward in the past 60 days.

Tesla’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. TSLA pulled off a trailing four-quarter earnings surprise of 33.3%, on average. The stock has also rallied 19.9% over a year.

Dorman has an expected earnings growth rate of 15.9% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised around 0.2% upward in the past 60 days.

Dorman’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and met the consensus mark in one. DORM pulled off a trailing four-quarter earnings surprise of 10.41%, on average. The stock has declined 8.9% over a year.

SMP Motor has an expected earnings growth rate of 5.5% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised around 0.2% upward in the past 60 days.

SMP Motor’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. SMP pulled off a trailing four-quarter earnings surprise of 67.27%, on average. The stock has also rallied 13% over a year.