AutoNation Inc.AN reported record adjusted earnings of 95 cents per share in fourth-quarter 2016, which decreased from 96 cents in the fourth quarter of 2015. Adjusted earnings also missed the Zacks Consensus Estimate of 96 cents. Adjusted earnings exclude 19 cents per share gain related to the business divestiture.
Net income rose to $115.3 million from $97.5 million in fourth-quarter 2015. Operating income increased 18.1% to $236.6 million from $200.4 million a year ago.
AutoNation reported revenues of $5.48 billion, up 2.6% year over year. However, revenues fell short of the Zacks Consensus Estimate of $5.59 billion. The year-over-year improvement in the top line can be attributed to better performance across all the businesses.
New vehicle revenues inched up 1.4% to $3.2 billion despite a 1.3% fall in new vehicle unit sales to 84,622 vehicles. Revenues per vehicle retailed went up 2.7% to $37,671. On a same-store basis, new vehicle revenues declined 2.4% to $2.97 billion.
Used vehicle (retail and wholesale) revenues climbed 5.5% to $1.22 billion on a 4.4% and 18.3% revenue rise in the retail sector and wholesale sector, respectively. Retail unit sales fell 2.4% to 55,213 vehicles; while revenues per vehicle retailed rose 2% to $20,128. On a same-store basis, used vehicle revenues improved 2.3% to $1.14 billion.
Revenues at the parts and service business advanced 5.7% to $822.5 million in the reported quarter. Meanwhile, the finance and insurance business recorded a 0.1% increase in revenues to $216.5 million.
AutoNation, Inc. Price, Consensus and EPS Surprise
AutoNation posted a year-over-year rise of 7% in earnings to $4.16 per share for full-year 2016. The figure surpassed the Zacks Consensus Estimate of $4.04. Revenues for 2016 were up 4% to roughly $21.6 billion from $20.9 billion in 2015. The figure missed the Zacks Consensus Estimate of $21.7 billion.
Revenues at the Domestic segment - comprising stores that sell vehicles manufactured by General Motors Co. GM , Ford Motor Co. F and others - advanced 8.5% to $1.9 billion as retail new vehicle unit sales rose 4.7% to 28,711 vehicles. The segment's income fell 17.8% to $64.2 million in the quarter under review.
Revenues at the Import segment - consisting of stores that sell vehicles manufactured primarily by Toyota Motor Corp. TM and other Japanese automakers - dipped 2.4% to $1.68 billion owing to a 5.5% fall in retail new vehicle unit sales to 36,488 automobiles. Segment income decreased 5.6% to $66.8 million in the reported quarter.
Revenues at the Premium Luxury segment - consisting of stores that sell vehicles manufactured primarily by Mercedes, BMW and Lexus - edged down 0.3% to $1.79 billion. Retail new vehicle sales descended 1.4% to 19,423 luxury vehicles. The segment's income declined 8.7% to $93.4 million in the reported quarter.
Balance Sheet and Capex
AutoNation's cash and cash equivalents fell to $64.8 million as of Dec 31, 2016, from $74.1 million as of Dec 31, 2015. The company's inventory was valued at $3.52 billion as of Dec 31, 2016, compared with $3.61 billion as of Dec 31, 2015.
Non-vehicle debt increased to $2.72 billion from $2.36 billion as of Dec 31, 2015. Capital expenditures were $253.2 million in 2016 compared with $266.9 million in the prior-year period.
During 2016, the company repurchased 10.5 million shares for $497 million. As of Feb 1, 2017, AutoNation had approximately $299 million remaining under its share repurchase program and around 101 million shares outstanding.
In the last three months, AutoNation's share price increased 26.7% while the Zacks categorized Retail/Wholesale Auto/Truck industry recorded a 27.8% increase. Weak earnings per share in the fourth quarter, deteriorating financial position and the competitive industry are putting pressure on the share price.
AutoNation currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank stocks here.
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