AutoNation (AN) Q1 Earnings Beat Expectations, Sales Miss

AutoNation Inc. (NYSE:AN) reported earnings of 97 cents per share in first-quarter 2017, which increased from 90 cents in the first quarter of 2016. Earnings also surpassed the Zacks Consensus Estimate of 91 cents.

Net income rose to $98.1 million from $95.9 million in first-quarter 2016. However, operating income inched down 0.3% to $206.7 million from $207.4 million a year ago.

AutoNation reported revenues of $5.14 billion, up 0.4% year over year. However, revenues fell short of the Zacks Consensus Estimate of $5.31 billion.

New vehicle revenues were relatively in line at $2.8 billion, despite a 4.1% fall in new vehicle unit sales to 75,798 units. Revenues per vehicle retailed went up 4.1% to $36,890. On a same-store basis, new vehicle revenues declined 0.6% to $2.7 billion.

Used vehicle (retail and wholesale) revenues were also almost flat year over year at $1.24 billion with a 3.2% rise in the retail sector and 30.3% decline in the wholesale sector. Retail unit sales rose 4.3% to 60,608 vehicles, while revenues per vehicle retailed fell 1% to $19,075. On a same-store basis, used vehicle revenues improved 0.3% to $1.21 billion.

Revenues at the parts and service business advanced 3% to $845.1 million in the reported quarter. Meanwhile, the finance and insurance business recorded a 0.7% decrease in revenues to $221.6 million.

AutoNation, Inc. Price, Consensus and EPS Surprise

AutoNation, Inc. Price, Consensus and EPS Surprise | AutoNation, Inc. Quote

Segment Details

Revenues at the Domestic segment—comprising stores that sell vehicles manufactured by General Motors Co. (NYSE:GM) , Ford Motor Co. (NYSE:F) and others—declined 2.6% to $1.8 billion as retail new vehicle sales fell 5.3% to 26,259 units. The segment’s income fell 20.7% to $61.4 million in the quarter under review.

Revenues at the Import segment—consisting of stores that sell vehicles manufactured primarily by Toyota Motor Corp. (NYSE:TM) and other Japanese automakers—dipped 2.6% to $1.63 billion owing to a 4.1% fall in retail new vehicle unit sales to 34,315 automobiles. Segment income decreased 5.8% to $71.7 million in the reported quarter.

Revenues at the Premium Luxury segment—consisting of stores that sell vehicles manufactured primarily by Mercedes, BMW and Lexus—rose 5% to $1.62 billion. Retail new vehicle sales descended 1.7% to 15,224 luxury units. The segment's income declined 3% to $80.5 million in the reported quarter.

Balance Sheet and Capex

AutoNation’s cash and cash equivalents rose to $56.3 million as of Mar 31, 2017, from $47.8 million as of Mar 31, 2016. The company’s inventory was valued at $3.69 billion as of Mar 31, 2017, compared with $3.93 billion as of Mar 31, 2016.

Non-vehicle debt decreased to $2.55 billion from $2.68 billion as of Mar 31, 2016. Capital expenditures were $86.8 million in first-quarter 2017 compared with $50.7 million in the prior-year period.

Share Repurchases

In first-quarter 2017, the company did not repurchase any shares. As of Apr 25, 2017, AutoNation had approximately $299 million remaining under its share repurchase program and around 101 million shares outstanding.

Price Performance

In the last three months, AutoNation’s share price fell 16.7% while the Zacks categorized Retail/Wholesale Auto/Truck industry recorded an 11.8% decrease.

Zacks Rank

AutoNation currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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