AutoNation Earnings Preview

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Investors are on the edge of their collective seats, hoping that AutoNation (NYS: AN) will top analyst expectations for the third consecutive quarter. The company will unveil its latest earnings on Thursday. AutoNation offers a range of automotive products and services, including new and used vehicles, parts and automotive repair, and maintenance services, as well as automotive finance and insurance products.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on AutoNation with seven of 11 analysts rating it hold. Analysts don't like AutoNation as much as competitor CarMax overall. Nine out of 12 analysts rate CarMax a buy compared to zero of 11 for AutoNation. While analysts still rate the stock a moderate sell, they are a little more optimistic about it compared to three months ago.
  • Revenue forecasts: On average, analysts predict $3.43 billion in revenue this quarter. That would represent a rise of 4.9% from the year-ago quarter.
  • Wall Street earnings expectations: The average analyst estimate is earnings of $0.48 per share. Estimates range from $0.45 to $0.51.

What our community says:
CAPS All-Stars are solidly behind the stock with 76.9% assigning it an outperform rating. The majority of the Fools are in agreement with the All-Stars as 71.5% give it an outperform rating. Fools have embraced AutoNation and haven't been shy with their opinions lately, logging 143 posts in the past 30 days. AutoNation's bearish CAPS rating of one out of five stars falls short of the Fool community sentiment.

Management:
AutoNation's profit has risen year over year by an average of 18.7% over the past five quarters. The company's revenue has now risen for two straight quarters.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters.

Quarter

Q2

Q1

Q4

Q3

Gross Margin

17.5%

17.1%

16.8%

16.7%

Operating Margin

4.3%

4.2%

4.1%

3.7%

Net Margin

2.2%

2.1%

2.1%

1.7%

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At the time this article was published

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