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AutoNation (AN) Q4 Earnings Surpass Estimates, Rise Y/Y

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AutoNation Inc. AN delivered fourth-quarter 2019 adjusted earnings of $1.31 per share, beating the Zacks Consensus Estimate of $1.15. The reported figure was also higher than the year-ago quarter’s $1.10 per share. The upside was mainly aided by increased income across all segments.

During the reported quarter, AutoNation’s revenues amounted to $5,549 million compared with the $5,412 million recorded in the prior-year quarter. However, the top-line figure missed the Zacks Consensus Estimate of $5,571 million.

In the quarter, same-store gross profit increased 5.6% year over year to $895.6 million, driven by growth in all business segments –– new vehicles, used vehicles, customer care and customer financial services. Net income from continuing operations was $157.7 million compared with $92.9 million reported in fourth-quarter 2018.

During the reported quarter, new-vehicle revenues declined 1.3% year over year to $3.02 billion. Used-vehicle revenues rose 10.9% to $1.34 billion from the year-ago quarter’s figure. Revenues in the parts and service business gained 2.7% to $891.3 million from that reported in fourth-quarter 2018. Net revenues in the finance and insurance business amounted to $265.4 million, up 8.1% from the prior-year quarter.

AutoNation, Inc. Price, Consensus and EPS Surprise


Segmental Details

Revenues in the Domestic segment declined 4.5% year over year to $1.67 billion. The segment’s income increased 19.2% to $65.2 million in the September-December quarter. The segment comprises stores that sell vehicles manufactured by General Motors, Ford and FCA US.

Revenues in the Import segment fell 1.4% to $1.62 billion. Nevertheless, the segment’s income rose 13.4% to $77.7 million in the reported quarter. The segment consists of outlets that sell vehicles manufactured primarily by Toyota, Honda and Nissan.

The Premium Luxury segment comprises stores that sell retail vehicles manufactured by Mercedes-Benz, BMW, Lexus, Jaguar Land Rover and Audi. Sales in the segment increased 8.7% to $2.06 billion. Segmental income jumped 23.1% to $112.5 million in the reported quarter.

Balance Sheet and Capex

AutoNation’s cash and cash equivalents were $42 million as of Dec 31, 2019, compared with $48.6 million as of Dec 31, 2018. The company’s inventory was valued at $3.3 billion as of Dec 31, 2019, compared with $3.65 billion in the prior-year period.

At the end of the fourth quarter, non-vehicle debt was $2.1 billion compared with $2.6 billion in the prior-year quarter. At the end of the quarter, capital expenditure was $87.3 million compared with $122 million in the year-earlier quarter.

Zacks Rank & Stocks to Consider

AutoNation currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Auto-Tires-Trucks sector are Gentherm Inc. (THRM - Free Report) , Gentex Corporation GNTX and SPX Corporation SPXC. While Gentherm sports a Zacks Rank #1 (Strong Buy), Gentex Corporation and SPX carry a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Gentherm has a projected earnings growth rate of 20.60% for the ongoing year. Its shares have gained 15.7% over the past year.

Gentex has an estimated earnings growth rate of 6.02% for 2020. The company’s shares have appreciated 57.1% in a year.

SPX has an expected earnings growth rate of 8.09% for the current year. The stock has rallied 62% in the past year.

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