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AutoNation (AN) Gains But Lags Market: What You Should Know

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In the latest trading session, AutoNation (AN - Free Report) closed at $115.24, marking a +1.93% move from the previous day. The stock lagged the S&P 500's daily gain of 2.14%. Meanwhile, the Dow gained 1.82%, and the Nasdaq, a tech-heavy index, lost 0.01%.

Coming into today, shares of the auto retailer had gained 8.26% in the past month. In that same time, the Retail-Wholesale sector lost 7.49%, while the S&P 500 lost 5.01%.

AutoNation will be looking to display strength as it nears its next earnings release. On that day, AutoNation is projected to report earnings of $5.32 per share, which would represent year-over-year growth of 90.68%. Meanwhile, our latest consensus estimate is calling for revenue of $6.52 billion, up 10.42% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $20.06 per share and revenue of $27.47 billion. These totals would mark changes of +10.58% and +6.3%, respectively, from last year.

Any recent changes to analyst estimates for AutoNation should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 11.73% higher. AutoNation is currently sporting a Zacks Rank of #1 (Strong Buy).

Digging into valuation, AutoNation currently has a Forward P/E ratio of 5.64. This valuation marks a discount compared to its industry's average Forward P/E of 6.67.

Also, we should mention that AN has a PEG ratio of 0.24. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Automotive - Retail and Whole Sales stocks are, on average, holding a PEG ratio of 0.4 based on yesterday's closing prices.

The Automotive - Retail and Whole Sales industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 18, putting it in the top 8% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.


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