AutoNation's (AN) Q3 Earnings & Revenues Beat Estimates

AutoNation Inc. (NYSE:AN) delivered third-quarter 2019 adjusted earnings of $1.18 per share, beating the Zacks Consensus Estimate of $1.11 per share. The reported figure, however, came in lower than the year-ago quarter’s $1.24 per share.

During the reported quarter, AutoNation’s revenues amounted to $5.46 billion compared with the $5.35 billion recorded in the prior-year quarter. The top-line figure also surpassed the Zacks Consensus Estimate of $5.34 billion.

In the quarter, same-store gross profit increased 5%, year on year, to $877 million, driven by growth in Customer Financial Services, Customer Care, and Used Vehicle gross profit. Net income from continuing operations was $100 million compared with the $112 million reported in third-quarter 2018.

During the third quarter, new-vehicle revenues declined 2% year over year to $2.87 billion. Used-vehicle revenues rose 9.5% to $1.4 billion from the year-ago quarter’s figure. Revenues in the parts and service business gained 4.5% to $902.6 million from third-quarter 2018. Net revenues in the finance and insurance business amounted to $266.2 million, up 7.6% from the prior-year quarter’s level.

AutoNation, Inc. Price and Consensus

Segmental Details

Revenues in the Domestic segment declined 3.4% year over year to $1.73 billion. The segment’s income increased 5% to $70 million in the July-September quarter. The segment comprises stores that sell vehicles manufactured by General Motors (NYSE:GM), Ford and FCA US.

Revenues in the Import segment fell 2.7% to $1.72 billion. Nevertheless, the segment’s income rose 2% to $87 million in the reported quarter. The segment consists of outlets that sell vehicles manufactured primarily by Toyota, Honda, Nissan and Hyundai.

The Premium Luxury segment comprises stores that sell retail vehicles manufactured by Mercedes-Benz, BMW, Lexus, Jaguar Land Rover and Audi. Sales in the segment increased 9.1% to $1.82 billion. Segmental income jumped 16% to $89 million in the reported quarter.

Balance Sheet and Capex

AutoNation’s cash and cash equivalents were $45 million as of Sep 30, 2019 compared with $52.6 million as of Sep 30, 2018. The company’s inventory was valued at $3.28 billion as of Sep 30, 2019 compared with $3.38 billion in the prior-year period.

At the end of the third quarter, non-vehicle debt was $2.27 billion compared with $2.57 billion in the prior-year quarter. At the end of the quarter, capital expenditures were $62.6 million compared with the year-earlier quarter’s $88.9 million.

Zacks Rank & Stocks to Consider

AutoNation currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks worth considering are Kinross Gold Corporation (NYSE:KGC) , sporting a Zacks Rank #1 (Strong Buy), and Aaron's, Inc. (NYSE:AN) and Alamos Gold Inc. (TSX:AGI) , both carrying a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinross Gold has an expected earnings growth rate of 210% for 2019. The company’s shares have rallied 78% in the past year.

Aaron's has an estimated earnings growth rate of 17.56% for the ongoing year. The company’s shares have surged roughly 65.8% in a year’s time.

Alamos Gold has a projected earnings growth rate of a whopping 340% for the current year. Its shares have gained around 28% over the past year.

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