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AutoNation (AN) Q1 Earnings Surpass Estimates, Sales Miss

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AutoNation, Inc. (AN - Free Report) reported first-quarter 2023 adjusted earnings of $6.05 per share, which increased 4.6% year over year and topped the Zacks Consensus Estimate of $5.96. This outperformance can be primarily attributed to the higher-than-expected income across Domestic, Import and Premium Luxury segments.

In the reported quarter, revenues amounted to $6,398.7 million, shrinking 5% year over year and missing the Zacks Consensus Estimate of $6,683 million.

AutoNation, Inc. Price, Consensus and EPS Surprise

AutoNation, Inc. Price, Consensus and EPS Surprise

AutoNation, Inc. price-consensus-eps-surprise-chart | AutoNation, Inc. Quote

Key Takeaways

In the reported quarter, new-vehicle revenues were up 4.4% year over year to $2,931.9 million but lagged the Zacks Consensus Estimate of $2,951 million. Gross profit from the segment came in at $286.9 million, declining 16.8% from $345 million reported in the prior-year quarter and missing the consensus mark of $298 million.

Used-vehicle revenues contracted 21% from the year-ago figure to $2,032.6 million, missing the consensus mark of $2,325 million. Gross profit from the segment came in at $154.4 million, up 13% and topping the consensus mark of $131 million.

Net revenues in the finance and insurance business amounted to $332.4 million, down 8.7% from the year-ago quarter and below the consensus mark of $363 million. Gross profit was $332.4 million, declining 8.7% and missing the consensus mark of $360 million.

Revenues from the parts and service business rose 8.6% to $1,089.8 million, topping the consensus metric of $1,041 million. Gross profit from this segment came in at $511.1 million, rising 10.8% year over year and beating the consensus mark of $482 million.

Segmental Details

Revenues from the Domestic segment were down 10% year over year to $1,831.1 million and below the consensus mark of $1,931 million. The segment’s income inched down 20.7% to $118.5 million in the reported quarter but came ahead of the consensus mark of $119 million.

Revenues from the Import segment shrunk 9.4% from the prior-year quarter to $1,789.3 million and missed the consensus mark of $1,854 million. The segment’s income contracted 13.9% to $160.4 million but topped the consensus mark of $150 million.

Premium Luxury segment sales moved up 0.3% to $2,484.9 million, lagging the consensus mark of $2,530 million. The segmental income was down 1.2% year over year to $226.8 million in the reported quarter but crossed the consensus mark of $199 million.

Financial Tidbits

Adjusted SG&A expenses, as a percentage of gross profit, was 60.8%, deteriorating 4.4 percentage points from the year-ago period. Expenses rose to $782.7 million from $741.4 million in the year-ago quarter.

AutoNation’s cash and cash equivalents were $58.3 million as of Mar 31, 2023, declining from $72.6 million recorded as of Dec 31, 2022. The company’s liquidity was $1.6 billion, including $58 million in cash and nearly $1.5 billion available under its revolving credit facility.

The firm’s inventory was valued at $2,196.2 million. At the end of the first quarter, non-vehicle debt was $3,882.4 million, increasing from $3,649.5 million recorded as of 2022 end. Capital expenditure in the quarter amounted to $95.9 million, increasing from $50.8 million in the year-ago period.

During the first quarter of 2023, AutoNation repurchased 2.4 million shares of common stock for an aggregate purchase price of $305 million. AutoNation has approximately $875 million shares remaining under its buyback authorization. Approximately 46 million shares are outstanding, marking a 45% decrease from 83 million outstanding shares as of 2020 end.

Zacks Rank & Key Picks

AutoNation currently carries a Zacks Rank #2 (Buy).

A few top-ranked players in the auto space are Geely Automobile Holdings Limited (GELYY - Free Report) , BYD Company Limited (BYDDY - Free Report) and Ferrari N.V. (RACE - Free Report) , all of which sport a Zacks Rank #1 (Strong Buy) at present.

Geely is engaged in automobile manufacturing and related areas. The Zacks Consensus Estimate for GELYY’s 2023 sales and earnings implies year-over-year growth of 57.5% and 7.4%, respectively.

BYD is engaged in the research, development, manufacture and distribution of automobiles, secondary rechargeable batteries, and mobile phone components. The Zacks Consensus Estimate for BYDDY’s 2023 and 2024 sales implies year-over-year growth of 175% and 26.2%, respectively.

Ferrari is engaged in designing, manufacturing and selling sports cars. The Zacks Consensus Estimate for RACE’s 2023 sales and earnings implies year-over-year growth of 14% and 19.8%, respectively.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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