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AutoNation (AN) is one of the largest automotive retailers in the United States with over 230 dealerships. The company has created an online buying capability called AutoNation Express that is now available and linked to 84 of its dealerships.
As independent new-car dealers have fallen 30% since 1987, large dealerships have benefited with sales up 13% in 2014, double the industry gain. Large dealerships now have 20% of the new-car market with AutoNation the largest at 3.5% of new car sales. This has enabled efficiencies of scale, clout with the 34 brands that they sell and the ability to shift service people to dealers, as needed, in support of this highly lucrative aspect of the automotive retailing business.
The March retail sales report showed Auto and Parts Dealers as the strongest category in the retail sector with monthly gains of 2.74%. This was reflected in AN’s 1st quarter earnings which were reported on Wednesday last week before the opening. AutoNation reported record 1st quarter earnings of $0.97, besting analyst estimates of $0.89 and beating on the top-line as well.
Analysts have raised their estimates for AutoNation over the past 30 days and Stifel analyst James Albertine moved away from the pack when he raised his estimates to $4.08 in 2015 and $4.53 per share in 2016 vs. $3.49 in 2014.
The company was featured in a very bullish article in Barron’s last week that detailed the strong progress the company has made under CEO Mike Jackson since 1999. After reporting record earnings, AN spiked up on Wednesday to $67.50 and then pulled back to finish the week at $64.80. Buy this pullback in AN as analysts are likely to continue to raise their earnings estimates, creating demand for this market leading automobile retailer.
AutoNation has a very bullish Chaikin Power Gauge stock rating and is in the very strong Nonfood Retail-Wholesale industry group. The very bullish Power Gauge rating has been driven by a variety of factors in our 20-factor model. These include high return on equity, a relatively low price to sales ratio, strong earnings growth and recent brokerage firm upgrades. Its industry group strength contributes to a very bullish Expert Opinion rating.
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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 Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
