AutoNation (AN) Q2 Earnings Beat on Solid New Vehicle Sales
AutoNation, Inc. AN reported second-quarter 2023 adjusted earnings of $6.29 per share, which decreased 2.9% year over year but topped the Zacks Consensus Estimate of $5.83. This outperformance can be primarily attributed to higher-than-expected new vehicle revenues and profits. In the reported quarter, revenues amounted to $6,890.1 million, surpassing the Zacks Consensus Estimate of $6,645 million. The company had recorded revenues of $6,869.2 million in the second quarter of 2022. Revenues across all three segments (Domestic, Import and Luxury) topped our projections, thanks to higher-than-expected volumes.
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 11.8% year over year to $3,281 million and also exceeded our estimate of $2,650 million on the back of stronger-than-expected volumes. New vehicle retail units sold totaled 62,444 units, topping our projection of 52,005 units as demand remained robust despite high costs of vehicle financing. Additionally, the revenue outperformance can also be attributed to a higher-than-expected average selling price (ASP). ASP per new vehicle unit retailed came in at $52,543, outpacing our estimate by 3.1%. Gross profit from the segment came in at $287.7 million, declining 18.6% year over year but topping our estimate of $260.2 million.
Used-vehicle revenues contracted 17% from the year-ago figure to $2,088 million, missing our projection of $2,315 million amid lower-than-expected ASP. ASP per used vehicle unit retailed came in at $28,326, missing our forecast of $29,112. Gross profit from the segment came in at $134.3 million, down 12.8% but topping our projection of $131.3 million.
Net revenues in the finance and insurance business amounted to $369.5 million, up 0.5% from the year-ago quarter but below our projection of $424 million. Gross profit was $369.5 million, up 0.5% but missing our estimate of $424 million.
Revenues from the parts and service business rose 10.5% to $1,145.3 million, topping our forecast by $28.3 million. Gross profit from this segment came in at $542.5 million, rising 12.6% year over year and beating our estimate of $514.7 million.
Segmental Details
Revenues from the Domestic segment were down 4.2% year over year to $1,955.5 million but above our projection of $1,892 million. The segment’s income inched down 24.4% to $115.8 million, marginally beating our estimate of $115.5 million.
Revenues from the Import segment rose 2.5% from the prior-year quarter to $1,997.7 million and exceeded our forecast of $1,831 million. The segment’s income contracted 10.1% to $173 million but topped our projection of $154 million.
Premium Luxury segment sales moved up 0.1% to $2,620.5 million, outpacing our projection of $2,526.8 million. The segmental income was down 14% year over year to $221.5 million in the reported quarter but crossed our estimate of $210.5 million.
Financial Tidbits
AutoNation’s cash and cash equivalents were $63.7 million as of Jun 30, 2023, declining from $72.6 million recorded as of Dec 31, 2022. The company’s liquidity was $1.4 billion, including $64 million in cash and nearly $1.3 billion available under its revolving credit facility.
The firm’s inventory was valued at $2,572.5 million. At the end of the second quarter, non-vehicle debt was $4,060.3 million, increasing from $3,649.5 million recorded as of 2022 end. Capital expenditure in the quarter amounted to $109.5 million.
During the second quarter of 2023, AutoNation repurchased 1.6 million shares of common stock for an aggregate purchase price of $207 million. AutoNation has approximately $670 million shares remaining under its buyback authorization. Approximately 44 million shares are outstanding, marking a 47% decrease from 83 million outstanding shares as of 2020 end.
Zacks Rank & Key Picks
AutoNation currently carries a Zacks Rank #2 (Buy).
A few other top-ranked players in the auto space include Ford F, General Motors GM and PACCAR PCAR. While Ford sports a Zacks Rank #1 (Strong Buy), GM and PCAR carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for F’s 2023 sales implies year-over-year growth of 6.6%. The 2023 EPS estimate has been revised upward by 4 cents in the past 30 days. The EPS estimate for 2024 has moved north by 3 cents in the past 30 days.
The Zacks Consensus Estimate for PCAR’s 2023 sales and earnings implies year-over-year growth of 17.4% and 36.7%, respectively. The 2023 EPS estimate has been revised upward by 2 cents in the past seven days.
The Zacks Consensus Estimate for GM’s 2023 sales implies year-over-year growth of 6.8%. The EPS estimate for 2023 has moved north by 28 cents in the past 30 days. The EPS estimate for 2024 has moved north by 26 cents in the past 30 days.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Ford Motor Company (F) : Free Stock Analysis Report
PACCAR Inc. (PCAR) : Free Stock Analysis Report
AutoNation, Inc. (AN) : Free Stock Analysis Report
General Motors Company (GM) : Free Stock Analysis Report
