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AutoNation's (AN) Q2 Earnings and Revenues Beat Estimates

Zacks Equity Research

AutoNation Inc. AN delivered second-quarter 2019 adjusted earnings of $1.20 per share, which beat the Zacks Consensus Estimate of $1.08 per share. In the year-ago quarter, the bottom line was $1.14 per share.

Net income from continuing operations was $101 million compared with $97 million in second-quarter 2018.

During the quarter under review, AutoNation’s revenues amounted to $5.34 billion compared with $5.39 billion in the prior-year quarter. The top line also surpassed the Zacks Consensus Estimate of $5.32 billion.

During the quarter, new-vehicle revenues declined 6.1% year over year to $2.8 billion. Used-vehicle revenues rose 6.2% to $1.4 billion from the year-ago quarter’s figure. Revenues in the parts and service business gained 5.1% to $901.5 million from second-quarter 2018. Net revenues in the finance and insurance business amounted to $255 million, up 3% from the prior-year quarter’s level.

AutoNation, Inc. Price, Consensus and EPS Surprise

 

AutoNation, Inc. Price, Consensus and EPS Surprise

AutoNation, Inc. price-consensus-eps-surprise-chart | AutoNation, Inc. Quote

 

Segmental Details

Revenues in the Domestic segment declined 6.5% year over year to $1.7 billion. The segment’s income inched down 1.8% to $66 million in the quarter under review. The segment comprises stores that sell vehicles manufactured by General Motors, Ford and FCA US.

Revenues in the Import segment fell 5.2% to $1.6 billion. Nevertheless, the segment’s income rose 4.2% to $81.4 million in the reported quarter. The segment consists of outlets that sell vehicles manufactured primarily by Toyota, Honda, Nissan and Hyundai.

The Premium Luxury segment comprises stores that retail vehicles manufactured by Mercedes-Benz, BMW, Lexus and Audi. Sales in the segment increased 5.2% to $1.8 billion. Segmental income increased 12.2% to $95.3 million in the reported quarter.

Balance Sheet and Capex

AutoNation’s cash and cash equivalents were $51.1 million as of Jun 30, 2019 compared with $53.1 million as of Jun 30, 2018. The company’s inventory was valued at $3.52 billion as of Jun 30 compared with $3.6 billion in the prior-year period.

At the end of the second quarter, non-vehicle debt was $2.4 billion compared with $2.7 billion in the prior-year quarter. At the end of the quarter, capital expenditures were $67.2 million compared with $103.2 million in the prior-year quarter.

Share Repurchase

During the second quarter of 2019, AutoNation repurchased 0.3 million shares of common stock for an aggregate purchase price of $11 million. As of Jul 19, the company has approximately $219 million remaining under authorization for share repurchase and 89 million shares outstanding.

Zacks Rank & Stocks to Consider

AutoNation currently carries a Zacks Rank #3 (Hold)

Some better-ranked stocks in the auto space are Copart, Inc CPRT, CarMax, Inc KMX and Advance Auto Parts, Inc AAP, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Copart has an expected long-term growth rate of 20%. In the past six months, shares of the company have surged 58.2%.

CarMax has an expected long-term growth rate of 12.6%. In the past six months, shares of the company have rallied 43%.

Advance Auto Parts’ expected long-term growth rate of 11.56%. In the past six months, shares of the company have risen 2.9%.

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