Here's How Much a $1000 Investment in AutoNation Made 10 Years Ago Would Be Worth Today
For most investors, how much a stock's price changes over time is important. Not only can it impact your investment portfolio, but it can also help you compare investment results across sectors and industries.
Another factor that can influence investors is FOMO, or the fear of missing out, especially with tech giants and popular consumer-facing stocks.
What if you'd invested in AutoNation (AN) ten years ago? It may not have been easy to hold on to AN for all that time, but if you did, how much would your investment be worth today?
AutoNation's Business In-Depth
With that in mind, let's take a look at AutoNation's main business drivers.
Incorporated in Delaware in 1991, AutoNation, Inc. is the largest automotive retailer in the United States. Apart from retailing new and used vehicles, the company offers vehicle maintenance and repair services, vehicle parts, extended service contracts, vehicle protection products, and other aftermarket products. In addition, it arranges financing for vehicle purchases through third-party sources.
As of Dec 31, 2022, AutoNation owned and operated over 247 new vehicle franchises from 247 stores located in the United States. As of 2022 end, the company owned 55 AutoNation-branded collision centers, 13 AutoNation USA used vehicle stores, four AutoNation-branded automotive auction operations, three parts distribution centers and an auto finance company.
The core brands of new vehicles that the firm sells accounted for around 89% of the new vehicles that AutoNation sold in 2021. The core brands offered by the company are — Toyota, Ford, Honda, General Motors, FCA US, Mercedes-Benz, Nissan, BMW and Volkswagen.
AutoNation’s business is divided into three operating segments — Domestic (accounted for about 39.5% of the company’s revenues in 2022), Import (28.5%) and Premium Luxury (38%).
The Domestic segment includes stores that sell vehicles manufactured by General Motors, Ford and Fiat Chrysler; whereas the Import segment comprises stores that sell vehicles manufactured by Toyota, Honda, Nissan, Hyundai and others.
The Premium Luxury segment includes stores that sell vehicles manufactured by Daimler (Mercedes Benz division), BMW, Toyota (Lexus division), Audi and others. Its diversified set of automotive retail franchises supports the automotive retailer’s business, which is sensitive to macroeconomic conditions.
In 2022, new vehicle sales generated 43.5% of revenues, used vehicle sales accounted for 35.8%, parts and services (also referred as “customer care”) added 15.2%, finance & insurance (also referred to as “customer financial services”) constituted 5.3%, and other revenues accounted for 0.1%. In terms of gross profit, the largest contributor was parts and services with 36%, followed by finance and insurance with 27.3%, new vehicle with 26%, and used-vehicle with 10.5%.
Bottom Line
Anyone can invest, but building a successful investment portfolio requires research, patience, and a little bit of risk. So, if you had invested in AutoNation ten years ago, you're likely feeling pretty good about your investment today.
According to our calculations, a $1000 investment made in August 2013 would be worth $3,450, or a gain of 245%, as of August 22, 2023, and this return excludes dividends but includes price increases.
Compare this to the S&P 500's rally of 167.82% and gold's return of 32.38% over the same time frame.
Analysts are forecasting more upside for AN too.
AutoNation's diversified product mix and multiple streams of income reduce risk profile and augur well for earnings and sales growth. Enhanced digital solutions have helped AutoNation to further boost profitability and market presence. The buyouts of Priority 1 Automotive and Peacock Automotive’s 11 dealerships are boosting AutoNation’s growth prospects. Its robust share repurchase program and digitization efforts are commendable. However, high cost of vehicle financing may weigh on the demand for new vehicles, thus limiting its near-term prospects. While the company’s store expansion plans are likely to boost long-term growth, they may strain the near-term financials of the firm. Rising debt levels and stiff competition also play spoilsport. As such, investors are advised to wait for a better entry point.
The stock is up 7.07% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 7 higher, for fiscal 2023. The consensus estimate has moved up as well.
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AutoNation, Inc. (AN) : Free Stock Analysis Report
