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AutoNation Inc AN Stock Quote

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Morningstar‘s Stock Analysis AN

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AutoNation's Q2 Is Another Record, and It Will Acquire a Captive Finance Arm

Analyst Note

| David Whiston, CFA, CPA, CFE |

We are not changing our AutoNation fair value estimate after it reported its best-ever quarterly EPS. Diluted EPS of $6.48 rose by 34% year over year to beat the Refinitiv consensus of $6.22. Although results remain strong, we think continued fears of a possible recession and of peak earnings for the cycle happening now will remain an overhang on dealer stocks for the next few quarters. Same-store revenue fell by 5.4% mostly due to a 17.4% decline in new vehicle revenue. The chip shortage continues to hurt new vehicle inventory for all automakers and same store new unit volume fell by 27.5%. This supply dearth helps pricing power though and same store new vehicle revenue per unit rose by 13.9% to $50,627 and gross profit per new unit grew 47% to $6,109 which enabled aggregate same store new gross profit dollars to rise by 6.6%. Same store used vehicle gross profit declined by 22.1% despite an 18.4% rise in price per unit. This trend exists throughout our coverage due to the chip shortage significantly raising used inventory acquisition costs, which will likely continue into next year, in our view.

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Company Profile AN

Business Description

AutoNation is the largest automotive dealer in the United States, with 2021 revenue of $25.8 billion and about 250 dealerships at nearly 350 locations, plus 57 collision centers. The firm also has 11 AutoNation USA used-vehicle stores, four auction sites, and three parts distributors all across 17 states primarily in Sunbelt metropolitan areas. New-vehicle sales account for about half of revenue; the company also sells used vehicles, parts, and repair services as well as auto financing. The company (formerly Republic Industries) spun off its waste management unit (Republic Services) in 1999 and its car rental businesses (ANC Rental) in 2000. Wayne Huizenga founded the company in the 1990s to bring the rollup acquisition strategy to auto retailing, which has proved to be a smart move.

200 SW 1st Avenue
Fort Lauderdale, FL, 33301
T +1 954 769-6000
Industry Auto & Truck Dealerships
Most Recent Earnings Jun 30, 2022
Fiscal Year End Dec 31, 2022
Stock Type Cyclical
Employees 22,200

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