) would release its results for the second quarter of 2012 before
the market opens on July 19. The automotive retailer posted a
profit of 56 cents per share in the first quarter of the year,
surpassing the Zacks Consensus Estimate by 3 cents. In the upcoming
quarter, the Zacks Consensus Estimate for the company is a profit
of 59 cents per share, reflecting annualized estimated growth of
With respect to earnings surprise, the company has outperformed the
Zacks Consensus Estimate in three of the trailing four quarters and
was in line in one of the quarters. With this, the company has
delivered an average earnings surprise of 5.39%.
The Zacks Consensus Estimates for full-year 2012 is $2.34,
respectively. The upside potential of the second quarter and
full-year estimates, essentially a proxy for future earnings
surprises, would be about 1.70% and 0.43%, respectively.
First Quarter Review
AutoNation recorded a 4.6% rise in profits to $73.5 million in the
quarter compared with $70.3 million in the corresponding quarter of
last year. Revenues went up 10.4% to $3.7 billion, driven by an
improvement in retail new vehicle sales. They were higher than the
Zacks Consensus Estimate of $3.6 billion.
Revenues from New Vehicle sales went up 11.7% to $1.9 billion on a
10.4% rise in unit sales to 61,516 vehicles. Used vehicle (retail
and wholesale) revenues grew 10.5% to $918.8 million on a 9.6%
increase in unit sales to 46,116 vehicles. Parts and service
business saw a 5.2% increase in revenues to $599.9 million whereas
Finance and Insurance business recorded a 17.6% increase in
revenues to $130.2 million.
The company expects new product launches, replacement demand and
robust consumer credit will boost sales in 2012. It continues to
expect full year U.S. industry new vehicle sales to grow 13% to
mid-14 million units.
Estimate Revisions Trend
Estimates for the second quarter have remained almost stable over
the past 30 days. The consensus has increased marginally by 1 cent
from 58 cents over the past 60 days.
Agreement of Estimate Revisions
Over the last 30 days, two out of ten analysts covering the stock
have revised the estimates upward while none moved it downward. The
upward pressure in estimates can be attributable to better retail
sales trends. Over the last seven days, none of the analysts made
any estimate revisions for the quarter.
Estimates for 2012 depict the same trend. Two out of eleven
analysts covering the stock have revised the estimates upward while
none moved it downward over the last 30 days. However, there was no
downward or upward revision in annual estimates over the last week.
Magnitude of Estimate Revisions
Following the first quarter earnings release, estimates for the
second quarter and full-year 2012 have been raised by 2 cents to 58
cents and 6 cents to $2.33, respectively. This can be attributable
to AutoNation's higher profit during the quarter, better
performance of the segments and share repurchase strategy.
Headquartered in Fort Lauderdale, Florida, AutoNation is the
largest automotive retailer in the U.S. The company owns and
operates about 260 new vehicle franchises that sell 32 brands
located in the major metropolitan markets in 15 states.
The company offers an array of automotive products and services,
ranging from new vehicles, used vehicles, vehicle maintenance and
repair services, vehicle parts, vehicle protection products to
other aftermarket products. Its main competitors include
Penske Automotive Group Inc.
Group 1 Automotive Inc.
Sonic Automotive Inc.
AUTONATION INC (AN): Free Stock Analysis Report
GROUP 1 AUTO (GPI): Free Stock Analysis Report
PENSKE AUTO GRP (PAG): Free Stock Analysis
SONIC AUTOMOTVE (SAH): Free Stock Analysis
To read this article on Zacks.com click here.
Recovery in auto sales owing to improved customer confidence and
introduction of new products will boost the company's earnings. In
addition, revamped models of Civic and Accord as well as
stabilization of inventory are expected to help AutoNation
outperform the growth in U.S. light vehicle market.
The company recorded a solid 31% rise in new vehicle sales in the
second quarter of 2012. Sales in the Domestic segment rose 18%,
Import segment jumped 47% and Premium Luxury segment went up 18%
during the quarter. However, the company's sales were adversely
affected by higher fuel prices and lower availability of sub prime
Currently, AutoNation retains a Zacks #2 Rank, which translates
into a short-term (1 to 3 months) Buy rating and we have a
long-term (more than 6 months) Neutral recommendation on the