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AutoNation (AN) Q1 Earnings Beat, Shares Fall

AutoNation Inc. AN is the largest automotive retailer in the U.S. and is about twice the size of its nearest competitor. The company is positioned to benefit from recovery in the auto market, backed by its optimal brand and market mix as well as a disciplined cost structure. Rising average age of cars and trucks in the U.S., a robust consumer credit environment and an increase in new product offerings from automotive manufacturers is leading to a strong selling environment.

However, AutoNation operates in a highly competitive industry. In addition, the company’s performance is dependent on automakers, which need to supply adequate attractive, high-quality and desirable product mix at the right time in order to satisfy the demand of customers. Thus, any fluctuation in supply can adversely affect the results of the company.

Estimate Trend & Surprise History

Investors should note that the first-quarter earnings estimate for AutoNation inched up by a cent over the past week.

The company has delivered mixed earnings surprises in the past. It has missed the Zacks Consensus Estimate in two of the trailing 4 quarters and reported in-line results in one quarter. Despite this, it has an average beat of around 0.48% for the last four quarter. Thus investors are eagerly awaiting AutoNation latest earnings report.

We have highlighted some of the key stats from this just-revealed announcement below:

Earnings Beat

AutoNation delivered adjusted earnings of 99 cents per share in the first quarter of 2016, which increased from 97 cents recorded in the first quarter of 2015. However, adjusted earnings surpassed the Zacks Consensus Estimate of 93 cents.

Revenues Miss Estimates

AutoNation reported revenues of $5.12 billion, up 4% year over year. However, revenues missed the Zacks Consensus Estimate of $5.24 billion.

Key Stats/Developments to Note

During the first quarter of 2016, AutoNation repurchased 7.9 million shares for $371 million.

AutoNation expects industry new vehicle sales to be above 17 million units in 2016.

Zacks Rank

Currently, AutoNation has a Zacks Rank #2 (Buy), but that could change following its earnings report which has just released.

Market Reaction

AutoNation’ shares have moved down 2.19% in pre-market trading so far following the release. Clearly, the initial reaction to the report is negative.

Check back later for our full write up on AutoNation’ earnings report!

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