AutoNation, Inc. reported fourth-quarter 2023 adjusted earnings of $5.02 per share. While this figure marked a 21.2% decrease compared to the previous year, it soared above the Zacks Consensus Estimate of $4.85. The standout performance can be largely credited to the robust revenues generated from the new vehicle and parts and service business sectors. Surpassing expectations, the company recorded revenues of $6.8 billion, outshining the Zacks Consensus Estimate of $6.65 billion. Noteworthy is the fact that revenues across the Import and Premium Luxury segments exceeded projections.
AutoNation, Inc. Price, Consensus, and EPS Surprise
AutoNation, Inc. price-consensus-eps-surprise-chart | AutoNation, Inc. Quote
Key Insights
In the fourth quarter, revenues from new vehicle sales witnessed a remarkable 7% surge year over year, amounting to $3.4 billion. This substantial growth exceeded the estimated revenue of $3 billion, primarily driven by higher-than-anticipated sales volumes. The total number of new vehicle retail units sold stood at 64,748 units, surpassing the projected 57,968 units. Despite a slight 0.8% year-over-year decline, the Average Selling Price (ASP) per new vehicle unit retailed was $52,000. The gross profit from this segment totaled $236.5 million, slightly exceeding the estimated $234.2 million.
Conversely, used-vehicle revenues witnessed a decline of 12.1% year over year, amounting to $1.9 billion, falling short of the $2.1 billion projection due to lower than anticipated volumes. Used vehicle retail units sold totaled 65,151 units, missing the projected 66,119 units. The ASP per used vehicle unit retailed stood at $27,338, marking an 8.2% year-over-year decrease. Gross profit from this segment amounted to $91.5 million, falling below the projected $121.8 million.
Moreover, net revenues in the finance and insurance business reached $347.4 million, marking a 0.6% increase from the preceding year but missed the projected $378 million. Gross profit in this area also reached $347.4 million, a 0.6% uptick but below the estimated $378 million.
On a positive note, revenues from the parts and service business surged by 10.9% to $1.14 billion, surpassing the forecasted $1.08 billion. Gross profit from this segment reached $539.9 million, marking a robust 12.7% year-over-year increase and surpassing the estimated $508.6 million.
Segmental Performance
The Domestic segment incurred a revenue decline of 4.1% year over year, amounting to $1.8 billion, lagging behind the projected $1.88 billion. Furthermore, the segment’s income plummeted by 38.5% to $73.9 million, missing the estimated $98.1 million.
On the other hand, revenues from the Import segment exhibited a 6.6% increase from the previous year, reaching $2 billion, outperforming the forecasted $1.91 billion. However, the segment’s income saw a 21.9% decline to $136.9 million, falling short of the estimated $143.1 million.
Similarly, sales in the Premium Luxury segment dipped by 1.2% to $2.64 billion, surpassing the projected $2.5 billion. The segmental income decreased by 20.9% year over year, amounting to $195.3 million, although it outperformed the estimated $188.7 million.
Financial Highlights
As of December 31, 2023, AutoNation possessed cash and cash equivalents totaling $60.8 million, declining from the $72.6 million recorded a year earlier. The company’s liquidity stood at $1.5 billion, inclusive of $61 million in cash and approximately $1.46 billion readily available under its revolving credit facility.
The firm’s inventory value amounted to $3.03 billion. Non-vehicle debt by the end of the fourth quarter totaled $4.03 billion, showing an increase from the $3.65 billion recorded by the end of 2022. Capital expenditure in the quarter totaled $124.3 million.
During the final quarter of 2023, AutoNation repurchased 1.15 million shares of common stock for $151.2 million in aggregate purchase price. As of February 9, 2024, the company still had approximately $320 million shares remaining under its buyback authorization.
Zacks Rank & Key Picks
AutoNation currently holds a Zacks Rank #3 (Hold).
Noteworthy players in the automotive sector include Modine Manufacturing Company, General Motors Company, and Oshkosh Corporation. While MOD and GM are currently rated as Zacks Rank #1 (Strong Buy) each, OSK is designated as a Zacks Rank #2 (Buy). For more insights, check out the complete list of today’s Zacks #1 Rank stocks here.
Projections for MOD’s 2024 sales point to a 4% rise year over year, while earnings are predicted to increase by a substantial 67.2%. Similarly, GM is expected to witness a 1.8% rise in sales and a 17.2% improvement in earnings for 2024. Lastly, OSK is projected to experience a 6.7% increase in sales and a 4% rise in earnings for 2024.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
