AutoNation Earnings: Good First Quarter and More Buybacks Leading to a Fair Value Estimate Increase

Narrow-moat AutoNation reported a good first quarter to start 2024, with diluted EPS down 26% year over year to $4.49 but still ahead of the LSEG consensus of $4.27. We are raising our fair value estimate to $171 from $162 after adjusting our model for how the year has started. The change is from a lower share count after increasing our 2024 share repurchase spending by $200 million to $900 million; better working capital inflows; the time value of money; and a slightly lower tax rate throughout our five-year explicit forecast period.