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AutoNation (AN) Up 0.5% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for AutoNation (AN - Free Report) . Shares have added about 0.5% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is AutoNation due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

AutoNation Q1 Earnings Beat Estimates, Revenues Miss

AutoNationreported adjusted earnings of $1.05 per share, beating the Zacks Consensus Estimate of 92 cents. In the year-ago quarter, the bottom line was $1.01 per share.

Net income from continuing operations was $92 millioncompared with $93 millionin first-quarter 2018.

During the quarter under review, AutoNation’s revenues were $4.98 billion compared with $5.26 billion in the prior-year quarter. The top line also missed the Zacks Consensus Estimate of $5.22 billion.

During the reported quarter, new-vehicle revenues decreased 10.3% year over year to $2.5billion. Used-vehicle revenues rose 1.4% to $1.3 billion from the year-ago figure. The parts and service business’s revenues gained 2.4% to $859 million from first-quarter 2018. Net revenues from the finance and insurance business were $234 million, reflecting decline of 1% from the prior-year quarter.

Segmental Details

Revenues at the Domestic segment — comprising stores that sell vehicles manufactured by General Motors, Ford and FCA US — declined 11.6% to $1.6 billion. The segment’s income decreased 6.8% to $56 million in the quarter under review.

Revenues at the Import segment — consisting of outlets that sell vehicles manufactured primarily by Toyota, Honda, Nissan and Hyundai — declined 9.5% to $1.5 billion. Further, the segment’s income lost 0.3% to $73 million in the reported quarter.

Revenues at the Premium Luxury segment comprise stores that retail vehicles manufactured by Mercedes-Benz, BMW, Lexus and Audi. The sales figure increased 0.9% to $1.7 billion. Segmental income declined 3.9% to $84.3 million in the reported quarter.

Balance Sheet and Capex

AutoNation’s cash and cash equivalents were $48.7million as of Mar 31, 2019, declining from $57.5 million as of Mar 31, 2018. The company’s inventory was valued at $3.8 billion as of Mar 31, 2019, comparedwith$3.5 billion recorded in the prior-year period.

At the end of the first quarter of2019, non-vehicle debt was $2.4 billion compared with $2.6 billion in first-quarter 2018. At the quarter end, capital expenditure was $40.4 million compared with $79.4 million in the prior-year quarter.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, AutoNation has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, AutoNation has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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