Back to top

Image: Bigstock

AutoNation's (AN) Q1 Earnings & Sales Beat, Increase Y/Y

Read MoreHide Full Article

AutoNation Inc. (AN - Free Report) reported first-quarter 2022 adjusted earnings of $5.78 per share, which skyrocketed 103% year over year and topped the Zacks Consensus Estimate of $5.39. This outperformance can be primarily attributed to the higher-than-expected used vehicle sales.

In the reported quarter, revenues amounted to $6,752.8 million, up 14.4% year over year. The top line also crossed the Zacks Consensus Estimate of $6,628.1 million.

Key Takeaways

In the quarter, new-vehicle revenues inched down 6% year over year to $2,807.2 million and missed the Zacks Consensus Estimate of $3,230 million. Gross profit from the segment came in at $345 million, steeply rising 81.6% from $190 million reported in the prior-year quarter but missing the consensus mark of $389 million.

Used-vehicle revenues also rose 47.1% from the year-ago figure to $2,572.4 million, beating the consensus mark of $2,310 million. Gross profit from the segment came in at $136.6 million, down 2.6% and missing the consensus mark of $170 million.

Net revenues in the finance and insurance business amounted to $363.9 million, up 16.3% from the year-ago quarter but lagging the consensus mark of $373 million. Gross profit was $364 million, up 16.3% year over year but lagging the consensus mark of $391 million.

Revenues from the parts and service business rose 18% to $1,004 million and topped the consensus metric of $972 million. Gross profit from this segment came in at $461.1 million, rising 18.5% year over year and beating the consensus mark of $438 million.

During the quarter under discussion, AutoNation entered the Charleston market in South Carolina and Charlotte market in North Carolina. Each of the AutoNation USA stores has been profitable.

The company intends to open 12 additional new stores over a year and targets to have more than 130 AutoNation USA stores in operation from coast to coast by the end of 2026.

Segmental Details

Revenues from the Domestic segment were up 10.2% year over year to $2,034.4 million. The segment’s income jumped 26.1% to $149.4 million in the reported quarter.

Revenues from the Import segment grew 11.6% from the prior-year quarter to $1,974.1 million. The segment’s income also climbed 47.9% to $186.2 million.

Premium Luxury segment sales rose 17.8% to $2,478.7 million. The segmental income also surged 44.8% year over year to $229.5 million in the reported quarter.

Financial Tidbits

The adjusted SG&A expenses as a percentage of gross profit were 56.6% in the quarter, marking a 610-basis point expansion from the corresponding period of 2021.

AutoNation’s cash and cash equivalents were $608.1 million as of Mar 31, 2022, a sharp rise from $350 million in the year-ago period. The company’s liquidity was $2.4 billion, including $608 million in cash and nearly $1.8 billion available under its revolving credit facility.

The firm’s inventory was valued at $1,698.3 million. At the end of the first quarter, non-vehicle debt was $3,548.3 million. Capital expenditure in the quarter amounted to $50.8 million.

During the reported quarter, AutoNation repurchased 3.5 million shares of common stock for an aggregate purchase price of $381 million. It had around $376 million remaining for share buyback under current authorization on Apr 19.

Zacks Rank & Other Key Picks

AN currently carries a Zacks Rank #1 (Strong Buy).

Some other top-ranked players in the auto space are Rush Enterprises (RUSHA - Free Report) , Group 1 Automotive, Inc. (GPI - Free Report) and Arcos Dorados (ARCO - Free Report) , each carrying a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Rush has an expected earnings growth rate of 11.14% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised around 8.3% upward in the past 60 days.

Rush’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. RUSHA pulled off a trailing four-quarter earnings surprise of 39.3%, on average. The stock has lost 0.1% over the past year.

Group 1 has an expected earnings growth rate of around 10% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised around 8% upward in the past 60 days.

Group 1’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. GPI pulled off a trailing four-quarter earnings surprise of 10%, on average. The stock has gained 4.1% over the past year.

Arcos has an expected earnings growth rate of around 10% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised around 18% upward in the past 60 days.

Arcos’ earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed in one. ARCO pulled off a trailing four-quarter earnings surprise of 37.5%, on average. The stock has grown 52.8% over the past year.