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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 $107.84, marking a +1.73% move from the previous day. This move lagged the S&P 500's daily gain of 3.06%. Meanwhile, the Dow gained 2.8%, and the Nasdaq, a tech-heavy index, added 0.16%.

Coming into today, shares of the auto retailer had lost 13.49% in the past month. In that same time, the Retail-Wholesale sector lost 6.55%, while the S&P 500 lost 6.15%.

Investors will be hoping for strength from AutoNation as it approaches its next earnings release. The company is expected to report EPS of $6.41, up 25.2% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $6.78 billion, up 6.27% from the prior-year quarter.

AN's full-year Zacks Consensus Estimates are calling for earnings of $24.74 per share and revenue of $27.2 billion. These results would represent year-over-year changes of +36.38% and +5.25%, respectively.

Any recent changes to analyst estimates for AutoNation should also be noted by investors. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

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. Within the past 30 days, our consensus EPS projection remained stagnant. AutoNation currently has a Zacks Rank of #2 (Buy).

In terms of valuation, AutoNation is currently trading at a Forward P/E ratio of 4.28. Its industry sports an average Forward P/E of 4.61, so we one might conclude that AutoNation is trading at a discount comparatively.

Also, we should mention that AN has a PEG ratio of 0.61. 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. The Automotive - Retail and Whole Sales industry currently had an average PEG ratio of 0.57 as of yesterday's close.

The Automotive - Retail and Whole Sales industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 80, putting it in the top 32% 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.

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