AutoNation Inc. AN reported first-quarter 2020 adjusted earnings of 91 cents per share, which beat the Zacks Consensus Estimate of 70 cents on the back of higher-than-expected revenues. However, the reported figure declined from the year-ago quarter’s $1.05 per share. Heightened coronavirus woes and the enforcement of stay-at-home orders — especially in March — dented vehicle demand, in turn hurting the automotive retailer’s year-over-year performance.
During the reported quarter, AutoNation’s revenues amounted to $4,667 million compared with $4,981.8 million recorded in the prior-year period. However, the top line surpassed the Zacks Consensus Estimate of $4,555 million.
Same-store revenues and gross profit decreased 4.9% and 3% year over year to $4,659.6 million and $812.4 million, respectively.
During the reported quarter, new-vehicle revenues declined 8.6% year over year to $2.28 billion. Used-vehicle revenues also fell 6.8% from the year-ago figure to $1.25 billion. Revenues from the parts and service business remained unchanged from the prior-year level of $876 million. Net revenues in the finance and insurance business amounted to $235.8 million, down 0.3% from the prior-year quarter.
AutoNation Inc Price, Consensus and EPS Surprise
AutoNation Inc price-consensus-eps-surprise-chart | AutoNation Inc Quote
Revenues in the Domestic segment declined 5.4% year over year to $1.48 billion. The segment’s income also decreased 3.7% year over year to $54.1 million in the January-March quarter. The segment comprises stores that sell vehicles manufactured by General Motors, Ford and FCA US.
Revenues in the Import segment were down 9% from the prior-year quarter to $1.36 billion. The segment’s income also declined 9.2% year over year to $65.9 million in the reported quarter. The segment consists of outlets that sell vehicles manufactured primarily by Toyota, Honda, Subaru, Hyundai 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 fell 6.8% from a year ago to $1.61 billion. Segmental income also slipped 4.9% year over year to $80.2 million in the reported quarter.
Financials & Share Buyback
AutoNation’s cash and cash equivalents were $411 million as of Mar 31, 2020 compared with $42 million on Dec 31, 2019. The company’s inventory was valued at $3.67 billion as of Mar 31, 2020 compared with $3.71 billion in the prior-year period. At first quarter-end, non-vehicle debt was $2.52 billion compared with $2.43 billion in the comparable prior-year period. Capital expenditure during the quarter amounted to $30 million.
During the quarter, it bought back 2.5 million shares for an aggregate purchase price of $80 million. As of May 8, 2020, the firm had $139 million remaining under the share repurchase authorization. However, amid coronavirus-led uncertainty and financial crisis, AutoNation has suspended the share repurchase program.
Zacks Rank & Key Picks
AutoNation currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the same sector are Veoneer, Inc. VNE, Unique Fabricating, Inc. UFAB and Modine Manufacturing Company MOD, each carrying a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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