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AutoNation Inc AN

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

AutoNation Hires Mike Manley to Replace Legendary CEO Mike Jackson

Analyst Note

| David Whiston, CFA, CPA, CFE |

We are not changing our fair value estimate after AutoNation announced on Sept. 21 that CEO and director Mike Jackson, 72, will retire from both positions on Nov. 1. Jackson returned to the CEO role in April 2020 after then-CEO Cheryl Miller went on medical leave. The plan since July 2020 had been for Jackson to remain as CEO until his contract expiration next April 12. Jackson first retired in March 2019 after about 20 years in the role, but his replacement, Carl Liebert from USAA, turned out to be a poor fit. Miller took over in July 2019, but took leave in April 2020 and decided not to return in July 2020. We’ve said in our report that we expected the next CEO to come from outside the company. We also noted a key ESG risk to AutoNation’s story when Jackson’s first retirement led to hiring Liebert after only a few months, and when it was clear in July 2020 that Jackson was not staying past April 2022 and a successor would be named in early 2022.

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Company Profile

Business Description

AutoNation is the largest automotive dealer in the United States, with 2020 revenue of $20.4 billion and about 230 dealerships and over 300 locations including collison centers. The firm also has eight AutoNation USA used-vehicle stores, four auction sites, and 74 collision centers all across 16 states primarily in Sunbelt metropolitan areas. New-vehicle sales account for about 51% 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.

Contact
200 South West 1st Avenue
Fort Lauderdale, FL, 33301
T +1 954 769-6000
Sector Consumer Cyclical
Industry Auto & Truck Dealerships
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 21,600

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