AutoNation Announces Share Buyback - Analyst Blog

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AutoNation Inc. ( AN ) announced that its board of directors has authorized the repurchase of up to an additional $250 million of common stock. The company revealed that it has exhausted its previous stock buyback program.

Last year, the automotive retailer has repurchased 18.6 million shares for $635.2 million. This compared with repurchases of 26.6 million shares for $523.7 million in 2010.

In January, the company had announced that its board of directors authorized the repurchase of up to an additional $250 million of its common stock. With the increased authorization, the company had approximately $278 million worth of shares remaining under the Board-approved share repurchase authorization as of January 25, 2012. As of March 23, 2012, the company has about 124.6 million shares outstanding.

AutoNation is the largest automotive retailer in the U.S. and is about twice the size of its nearest competitor. It sells 33 different brands of new vehicles, the core brands being Ford ( F ), General Motors ( GM ), Chrysler, Toyota ( TM ), Nissan ( NSANY ), Honda ( HMC ) and BMW. These core brands represent more than 90% of the company sales.

AutoNation's effort to expand its dealer network by investing in existing stores and service centers will help it to outgrow peers. The company believes new vehicle sales will continue to improve with the long-term recovery in the U.S. market. As of December 31, 2011, the company owned and operated 258 new vehicle franchises that sell 32 brands located in major metropolitan markets in 15 states.

In the fourth quarter of 2011, the company saw a profit of $71 million or 51 cents per share compared with $68 million or 45 cents per share in the same quarter of 2010 (excluding debt refinancing costs of $1 million or 1 cent per share, after-tax), reflecting an increase of 13% on a per-share basis. With this, the company has beaten the Zacks Consensus Estimate of 48 cents per share.

Revenue went up 13% to $3.7 billion from $3.2 billion in the year-ago period, driven by stronger retail new and used vehicle sales. It was higher than the Zacks Consensus Estimate of $3.5 billion.

Gross profit per new vehicle retailed increased 2% to $2,451, despite the decrease in additional incentives compared to the year-ago period. However, gross profit per used vehicle retailed fell 5% to $1,485. Finance and insurance gross profit per vehicle retailed increased 5% to $1,223.

Due to the improved results and strong fundamentals, AutoNation retains a Zacks #2 Rank on its stock, which translates to a short-term (1 to 3 months) rating of "Buy".


 
AUTONATION INC ( AN ): Free Stock Analysis Report
 
FORD MOTOR CO ( F ): Free Stock Analysis Report
 
GENERAL MOTORS ( GM ): Free Stock Analysis Report
 
HONDA MOTOR ( HMC ): Free Stock Analysis Report
 
NISSAN ADR ( NSANY ): Free Stock Analysis Report
 
TOYOTA MOTOR CP (TM): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: AN , F , GM , HMC , NSANY

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