AutoNation (NYSE:AN) Q3 Earnings: What Can You Expect?

in EARNINGS/INVESTING IDEAS by

AutoNation, Inc. (NYSE:AN) is scheduled to report Q3 earnings results on October 21, 2020.

The company is expected to report earnings of $1.65/share on revenue of $5.2 billion. The consensus earnings per share (EPS) of $1.65/share is based on a poll of 9 analysts and represents a growth in eps of 34.9% over the same quarter last year, when the company reported earnings of $1.22/share.

The revenue forecast of $5.2 billion based on a poll of 8 analysts implies a year-over-year (YoY) decline in revenue of −4.8%. Last year the company reported $5.461 billion in revenue for the quarter.

Expected to report EPS growth of 34.9% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $5,199.70 $5,461.20 −4.8%
EPS $1.65 $1.22 34.9%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, missed 1 quarters, and met expectations 1 quarters.

What are your expectations from AutoNation, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.46 $1.41 206.3% Beat
Q1, 2020 $0.71 $0.91 27.3% Beat
Q4, 2019 $1.15 $1.31 14.2% Beat
Q3, 2019 $1.13 $1.22 8.1% Beat
Q2, 2019 $1.07 $1.20 11.8% Beat
Q1, 2019 $0.92 $1.04 13.2% Beat
Q4, 2018 $1.16 $1.10 −4.8% Missed
Q3, 2018 $1.24 $1.24 0.4% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 12.0%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 23, 2020 $48.85 $54.70 12.0% Increase
May 11, 2020 $38.32 $36.77 −4.0% Decline
February 11, 2020 $43.73 $47.72 9.1% Increase
October 29, 2019 $51.79 $51.56 −0.4% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.01, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.01 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

AutoNation, Inc. is currently trading at $63.30/share, up 1.7% for the day. The company is trading near its 52-week high of $63.46/share. The company’s stock price is up 15.7% since the last earnings report and up 4.7% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 63.44 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:AN Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 18.09 and a forward P/E multiple of 11.13.

AutoNation, Inc.’s current share price also implies a price-to-book (P/B) multiple of 1.76. The following table summarizes some other key fundamental ratios:

Data as of October 19, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $63.30
P/E Ratio 18.1x
P/E Ratio (Fwd) 11.1x
PEG Ratio −0.8
Total Debt / Total Capital 47.7%
Levered Free Cash Flow $1.016 billion
EV / EBITDA 10.7x

Finbox

AutoNation, Inc. is a mid-cap stock with a market capitalization of $5.429 billion and a total enterprise value of $10.1 billion. The company operates in the Consumer Discretionary sector and the Specialty Retail industry.

AutoNation, Inc., through its subsidiaries, operates as an automotive retailer in the United States. The company operates through three segments: Domestic, Import, and Premium Luxury. It offers a range of automotive products and services, including new and used vehicles; and parts and services, such as automotive repair and maintenance, and wholesale parts and collision services. The company also provides automotive finance and insurance products comprising vehicle services and other protection products, as well as arranges finance for vehicle purchases through third-party finance sources. As of December 31, 2019, it owned and operated 317 new vehicle franchises from 231 stores located primarily in metropolitan markets in the Sunbelt region. It also owned and operated 81 AutoNation-branded collision centers, 5 AutoNation USA stores, 4 automotive auction operations, and 17 parts distribution centers. The company was founded in 1991 and is headquartered in Fort Lauderdale, Florida.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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