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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

Cost Cuts Lead to Another Record Quarter for AutoNation

Analyst Note

| David Whiston, CFA, CPA, CFE |

AutoNation reported record quarterly results, with adjusted diluted quarterly EPS of $2.38, up 102% year over year, beating the Refinitiv consensus of $1.65. Same-store revenue growth was about flat as new-vehicle inventory shortages remain an issue, but pricing on both new and used vehicles remains robust, which when combined with large overhead cost cuts and more digital business enabled excellent operating leverage. We are raising our fair value estimate to $71 on a 20-basis-point increase to our midcycle operating margin assumption, stronger 2020 results than previously modeled, higher used-vehicle revenue over time, and the time value of money.

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Company Profile

Business Description

AutoNation is the largest automotive dealer in the United States, with 2019 revenue of $21.3 billion and over 230 dealerships. The firm also has five AutoNation USA used-vehicle stores and 81 collision centers all across 16 states primarily in Sunbelt metropolitan areas. New-vehicle sales account for about 52% 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.

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 Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 25,000

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