Company Reports

AutoNation's second-quarter adjusted diluted earnings per share of $5.56 rose 1.8% year over year as share repurchases more than offset the impact of a 1.5% same-store revenue decline. The firm spent $157 million on buybacks in the quarter and has spent $470 million this year through July 29.

We believe AutoNation's massive size and economies of scale advantages will allow the company to deliver operating margins of at least 4% at times, and we see upside potential to profits as the AutoNation USA stand-alone used-vehicle stores roll out. There are 24 USA stores as of June 2026; store count growth will be gradual.

AutoNation's first-quarter 2026 adjusted diluted earnings per share of $4.69 was up only a penny year over year, with same-store revenue down 3.7% on an 8.9% fall in new vehicle revenue. Same-store service sales rose 3.7%, and that segment posted a record gross profit.

We believe AutoNation's massive size and economy of scale advantages will allow the company to deliver operating margins of at least 4% at times, and we see upside potential to profits as the AutoNation USA stand-alone used-vehicle stores roll out. There are 25 USA stores as of March 2026; store count growth will be gradual.

We believe AutoNation's massive size and economy of scale advantages will allow the company to deliver operating margins of at least 4% at times, and we see upside potential to profits as the AutoNation USA stand-alone used-vehicle stores roll out. There are 26 USA stores as of year-end 2025; store count growth will be gradual.

AutoNation's stock rose over 7% during Feb. 6 trading after the company reported fourth-quarter adjusted diluted earnings per share from continuing operations of $5.08, up 2.2% year over year and above the $4.85 LSEG consensus.

We believe AutoNation's massive size and economy of scale advantages will allow the company to deliver operating margins of at least 4% at times, and we see upside potential to profits as the AutoNation USA stand-alone used-vehicle stores roll out. There are 26 USA stores as of September; store count growth will be gradual.

AutoNation's third-quarter results showed no significant weaknesses, and adjusted diluted earnings per share rose 24.6% year over year to $5.01. Management made acquisitions and spent $181 million on share repurchases, which was over 40% of 2025 buyback spending.

AutoNation's second-quarter adjusted diluted earnings per share of $5.46 beat the $4.71 LSEG consensus and increased 36.8% year over year. Adjusted overhead cost as a percent of gross profit fell by 110 basis points to a solid 66.2%.

We believe AutoNation's massive size and economy of scale advantages will allow the company to deliver operating margins of at least 4% at times, and we see upside potential to profits as the AutoNation USA stand-alone used-vehicle stores roll out. There are 26 USA stores as of June, and store count growth will be gradual.

AutoNation reported first-quarter adjusted diluted earnings per share up 4.2% year over year to $4.68. Healthy adjusted free cash flow of $236.8 million enabled $224.8 million of share repurchases in the quarter at $165 per share. Buybacks continued in April and total $254 million so far this year.

We believe AutoNation's massive size and economy of scale advantages will allow the company to deliver operating margins of at least 4% at times, and we see upside potential to profits as the AutoNation USA stand-alone used-vehicle stores roll out. There are 26 USA stores as of March, and long term we expect over 100.

The White House on March 5 said that the 25% tariffs on vehicles imported into the US from Canada and Mexico that began a day earlier will be delayed for one month, provided those vehicles comply with the United States-Mexico-Canada Agreement. The change came after President Donald Trump spoke with the leaders of the Detroit Three, who argued that the tariffs hurt firms such as theirs but not those that export vehicles into the US from nations such as Japan, Germany, and South Korea. White House comments to the media on March 5 indicate that tariffs on all vehicle imports regardless of the country of origin will still commence on April 2, so we think 25% or reciprocal tariffs will start at that time.

The 25% tariffs on all US imports from Canada and Mexico began March 4. These tariffs are punishment for what President Donald Trump feels are inadequate measures by these two nations and China for fentanyl and illegal immigration into the US. Lately, White House rhetoric seems more focused on fentanyl than immigration. We consider these tariffs very bad news for our US autos coverage, but for now, we're leaving our fair value estimates in place.

AutoNation finished 2024 with a strong fourth quarter and adjusted diluted EPS of $4.97 beating the $4.26 LSEG consensus. We are leaving our fair value estimate unchanged but will review all modeling assumptions when we roll our model for the 10-K. We don’t see the stock falling 3% the morning of earnings as justified, but it’s possible the market is concerned over US tariffs or continued year-over-year declines in new vehicle gross profit in 2025 following inflated levels in 2021-23 from the chip shortage. Although year-over-year fourth-quarter new vehicle gross profit per unit fell 18.7% to $2,969 while gross margin fell by 140 basis points to 5.6%, GPU increased from third-quarter 2024 by 5.9% and gross margin was flat. This fact suggests that management’s prediction in its earnings presentation of new vehicle margins normalizing higher than historical levels is reasonable. Fourth-quarter 2019 new vehicle metrics, for example, were GPU of $1,850 and gross margin of 4.5%.

We expect trade policy and electric vehicle tax credits to be the US auto industry focus of a second US presidential term for Donald Trump. Emission regulations will also likely come into play, as we don't expect the Trump administration to grant California a waiver to set its own rules under the Clean Air Act of 1970. We also expect Environmental Protection Agency rules for 2027-32 model years issued in March, which, relative to the 2026 rule, call for a nearly 50% reduction in average light vehicle fleet carbon dioxide emissions for 2032 down to 85 grams (73 for cars and 90 for trucks) of C02 per mile, to be reduced or eliminated.

AutoNation’s third-quarter adjusted diluted EPS of $4.02 fell 27% year over year and missed the $4.38 LSEG consensus. We don’t see the firm's growth trajectory as being in worse shape following the results, so we keep our fair value estimate. Adjusted EPS could've been in the low $4.30 range if the firm had treated as special items the $0.21 lost business impact from the CDK cyberattack affecting three weeks of July and about $0.08-$0.09 for stop-sale orders affecting many premium brands, such as BMW. Despite these headwinds, same-store new vehicle revenue and new units rose 0.1% and 2%, respectively. Total same-store revenue fell 4.4% on a 15.1% used vehicle decline and 9.9% finance and insurance decline. New vehicle profitability continues to fall from chip shortage highs while used vehicle consumers struggle with affordability, but new vehicle gross margin of 5.6% is 150 basis points above third-quarter 2019’s. Dealers run their businesses for gross profit dollars and new vehicle GPU of $2,804 was 75% above third-quarter 2019's.

AutoNation’s second quarter saw about $1.55 of lost earnings per share from the cyberattack on dealer management system vendor CDK, which started June 19 and lasted into early July. CDK’s systems are now fully operational in AutoNation’s stores, but the firm took a special item pretax charge of $42.8 million ($0.79 per share) to compensate salespeople for lost business and to foster retention. We believe the remaining roughly $0.76 of lost EPS can mostly be made up this year as sales catch up from the cyberattack, but lost service business mostly cannot be recovered. Adjusted diluted EPS of $3.99 missed the LSEG consensus of $4.34 and fell 36.6% year over year. Some of this decline is CDK-related, but dealers’ profits are also normalizing following inflated new vehicle profitability during the chip shortage in the past few years.

We believe AutoNation's massive size and economy of scale advantages will allow the company to deliver operating margins often above 4%, and we see upside potential to profits as its AutoNation USA stand-alone used-vehicle stores roll out. There are 23 USA stores as of first-quarter 2024, and long term we expect over 100.

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.