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AutoNation blows away profit estimates, reveals $1 billion stock buyback plan

Brian Sozzi
·Editor-at-Large
·2 min read
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The race to upgrade one's personal mobility (usually by purchasing a new or used car) during the COVID-19 pandemic continues to be a major tailwind to auto retailer AutoNation. Rock bottom interest rates help, too.

AutoNation — which operates 315 retail locations across the country — handily blew away sales and profit forecasts for the fourth quarter announced Tuesday. AutoNation CEO Mike Jackson will be on Yahoo Finance Live Tuesday in the 9:00 a.m. ET hour, to talk more about the quarter and the company's outlook. In the meantime, here is how AutoNation performed compared to Wall Street estimates.

  • Net Sales: $5.79 billion vs. $5.56 billion

  • Adjusted Diluted EPS: $2.43 vs. $2.01

The company saw same-store sales climb 5%. Underscoring the strong consumer demand, AutoNation said its new vehicle and used vehicle gross profit rose 50% and 9%, respectively, from the prior year. The company delivered sales gains in each vehicle segment: domestic (up 7.2%); import (up 3.5%) and premium luxury (up 4.5%). Operating profits in each vehicle segment also increased, paced by a 64.3% gain in domestic autos.

AutoNation also added two sweeteners for investors in the release.

The company said it exited its stake in online car seller Vroom, which it originally invested in October 2018. AutoNation's realized cash gain on the investment was $165 million. The company also revealed a new $1 billion stock buyback plan, something the Street has speculated could come given AutoNation's relatively clean balance sheet.

Investors' eyes will now turn on whether AutoNation's momentum could continue in the first part of 2021. The wildcard for all auto retailers (and automakers, frankly) is how the growing chip supply shortage will impact vehicle availability. Already the chip supply shortage has led to warnings on reduced production plans out of Ford, General Motors and others.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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