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AutoNation Gains From Store Openings, New-Vehicle Sales Hurt

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On May 14, we issued an updated research report on AutoNation, Inc. (AN - Free Report) .

The company gains from its business-expansion plans through store openings and acquisitions. In the recently reported quarter, it acquired one collision center, opened one automotive auction and two AutoNation USA stores.

The largest automotive retailer in the United States witnessed a year-over-year increase in revenues and adjusted earnings in first-quarter 2018. Moreover, both adjusted earnings and revenues surpassed the Zacks Consensus Estimate.


AutoNation, Inc. Price and Consensus



AutoNation pursues an active share-buyback policy. During first-quarter 2018, it repurchased 550,000 shares for $27 million while bought 10.1 million shares worth $435 million in 2017.

On a year-over-year basis, the company’s new vehicle unit sales and gross profit declined 6.3% and 9.8%, respectively. This decline in new-vehicle sales is due to the availability of off-lease used vehicles in the market.

Moreover, continuous rise in Selling, General and Administrative (SG&A) expenses is a concern for AutoNation. During the first quarter, the figure rose 5.3% to roughly $627 million, primarily due to salary and store compensations, commissions and advertising. Further, the company’s brand-extension strategies to acquire new customers are also hurting its financials.

Price Performance

Year to date, AutoNation’s stock has declined 9.3%, underperforming the 7.2% decrease of the industry it belongs to.



Zacks Rank & Stocks to Consider

AutoNation currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the auto space are Fiat Chrysler Automobiles N.V. (FCAU - Free Report) , Gentex Corporation (GNTX - Free Report) and BMW AG (BAMXF - Free Report) . Fiat Chrysler sports a Zacks Rank #1 (Strong Buy) while Gentex and BMW carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Fiat Chrysler has an expected long-term growth rate of 23.7%. In a year’s time, shares of the company have gained 106.3%.

Gentex has an expected long-term growth rate of 13%. Shares of the company have risen 17% over the past year.

BMW has an expected long-term growth rate of 4.5%. Shares of the company have risen 14% over the past year.

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