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AutoNation Inc (AN)
NYSE:AN
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AutoNation
(NYSE:AN)
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Rating:58Neutral
Price Target:
$216.00
▲(9.77% Upside)
Action:ReiteratedDate:02/13/26
The score is held back primarily by weaker financial quality versus prior years (margin compression, high leverage in 2022–2024, and volatile/declining cash generation) and soft technical momentum. These are partly offset by a relatively modest P/E valuation and an earnings-call outlook that emphasizes stable profitability, strong cash generation/capital returns, and continued growth in aftersales and AN Finance despite a slightly weaker 2026 market backdrop.
Positive Factors
Market Leadership
AutoNation's scale as the largest U.S. automotive retailer underpins durable advantages: broad dealership network, strong OEM relationships, and diversified revenue across sales, services and financing. That footprint supports procurement leverage, pricing flexibility and local market density that persist through cycles.
Strong Free Cash Flow & Capital Returns
Sizable adjusted free cash flow and disciplined deployment (>$1.5B in 2025 including $785M buybacks and ~$460M M&A) provide lasting financial optionality. This supports continued reinvestment, buybacks, and acquisitions without relying solely on external funding, cushioning the business versus cyclical dips.
Aftersales & Financial Services Strength
Record aftersales gross profit and expanding Customer Financial Services create higher-margin, recurring revenue streams that are less cyclical than new-vehicle sales. Scaling AN Finance (portfolio >$2.2B) and higher finance penetration diversify earnings and improve long-term margin stability and cash conversion.
Negative Factors
Margin Compression & Cash Volatility
Margins and cash generation have materially weakened from peak-cycle levels with operating cash flow down sharply (from ~$1.6B+ in 2021–22 to ~$315M in 2024) and free cash flow negative in 2024. That multi-year deterioration reduces resilience to downturns and limits predictable internal funding for growth.
Elevated Leverage
Material leverage in 2022–2024 amplifies downside risk if vehicle demand or credit conditions worsen. High debt levels can pressure interest costs and constrain strategic flexibility, making the company more sensitive to cyclical revenue declines despite historically strong ROE driven partly by that leverage.
New-Vehicle & EV Demand Weakness
Significant recent volume declines, especially a steep EV sales drop and lower used‑vehicle profitability, highlight structural demand and affordability headwinds. Because AutoNation is volume-sensitive, persistent new-unit weakness or slower EV adoption could materially pressure revenue and unit profitability over the medium term.
AutoNation (AN) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$7.12B
Dividend YieldN/A
Average Volume (3M)454.31K
Price to Earnings (P/E)11.8
Beta (1Y)0.92
Revenue Growth6.06%
EPS Growth-1.71%
CountryUS
Employees25,100
SectorConsumer Cyclical
Sector Strength84
IndustryAuto - Dealerships
Share Statistics
EPS (TTM)5.08
Shares Outstanding34,710,537
10 Day Avg. Volume538,443
30 Day Avg. Volume454,308
Financial Highlights & Ratios
PEG Ratio12.18
Price to Book (P/B)3.36
Price to Sales (P/S)0.28
P/FCF Ratio-39.83
Enterprise Value/Market Cap2.39
Enterprise Value/Revenue0.62
Enterprise Value/Gross Profit3.48
Enterprise Value/Ebitda10.91
Forecast
1Y Price Target
$235.00Price Target Upside19.43% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
EPS Forecast (FY)21.52
Revenue Forecast (FY)$28.26B
AutoNation Business Overview & Revenue Model
Company DescriptionAutoNation, 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, 2021, it owned and operated 339 new vehicle franchises from 247 stores located primarily in metropolitan markets in the Sunbelt region. The company also owned and operated 57 AutoNation-branded collision centers, 9 AutoNation USA used vehicle stores, 4 AutoNation-branded automotive auction operations, and 3 parts distribution centers. AutoNation, Inc. was founded in 1991 and is headquartered in Fort Lauderdale, Florida.
How the Company Makes MoneyAutoNation generates revenue primarily through the sale of new and used vehicles, with significant contributions from its service operations, which include maintenance and repair services. The company earns money by marking up the cost of vehicles sold and receiving commissions from manufacturers for meeting sales targets. Additionally, AutoNation profits from the sale of vehicle financing and insurance products, which are often bundled with vehicle purchases. The company also has partnerships with various automotive manufacturers and financial institutions, enhancing its ability to offer competitive financing solutions. The increasing focus on digital retailing, particularly through online sales platforms, has also contributed to its revenue growth by attracting a wider customer base.
AutoNation Earnings Call Summary
Earnings Call Date:Feb 06, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 16, 2026
Earnings Call Sentiment Positive
The call presented a mix of near-term headwinds and strong full-year operational and financial achievements. While AutoNation faced a notable Q4 decline in new unit volumes (driven heavily by electrified powertrain pullbacks and tougher comps), the company delivered meaningful full-year progress: revenue growth, double-digit adjusted EPS growth (16%), record adjusted free cash flow (up ~39%), disciplined capital deployment (>$1.5 billion including $785 million of buybacks and $460 million of M&A), and record aftersales and CFS results. Management articulated constructive operating initiatives (AN Finance scale-up, technician hiring, internal vehicle sourcing) and maintained a healthy balance sheet. On balance, the positives (sustained cash flow, EPS growth, aftersales/CFS records, financing portfolio traction, disciplined cap allocation) outweigh the quarter-specific challenges and market uncertainties.Q4-2025 Updates
Positive Updates
Full-Year Revenue and Earnings Growth
AutoNation delivered full-year revenue of $27.6 billion, up approximately 3% versus 2024, and full-year adjusted net income growth of 8%. Adjusted EPS grew 16% year-over-year to $20.22, marking four consecutive quarters of year-over-year EPS growth.
Strong Free Cash Flow and Capital Deployment
Adjusted free cash flow exceeded $1.0 billion ($1.05 billion), up approximately 39% year-over-year. Management deployed over $1.5 billion of capital in 2025, split roughly half for reinvestment (CapEx and M&A) and half returned to shareholders.
Share Repurchases and Share Count Reduction
Share repurchases totaled $785 million for the year, reducing shares outstanding by 10% year-over-year (average repurchase price $193). Over the last three years the company repurchased $2.1 billion, reducing share count by 36%.
Aftersales Record Performance
Aftersales delivered record fourth quarter and full-year gross profit (quarter close to $600 million). Same-store aftersales revenue increased 5% in Q4 and 6% for the full year; customer-pay and warranty grew 8% and 6% on a same-store basis in Q4, respectively. Full-year total gross margin improved by 80 basis points to 48.7%.
Customer Financial Services (CFS) Strength
CFS unit profitability grew 8% in Q4 and 6% for the full year, with fourth quarter and full-year gross profit per unit being the highest in company history. Finance penetration grew to about three-quarters of units sold with financing.
AN Finance Portfolio Growth and Profitability Inflection
AN Finance originations increased materially (full-year originations $1.76 billion vs $1.06 billion in 2024), portfolio exceeded $2.2 billion (more than doubled YoY). AN Finance moved from a $9 million operating loss in 2024 to a $10 million operating profit in 2025 (including $6 million in Q4). Funded status improved to ~88% in December and >90% pro forma after a near $750 million ABS completed in January.
Used-vehicle resilience and internal sourcing
For the full year, used unit sales increased 1% and used gross profit increased 5% reflecting strength in retail and wholesale; used selling prices held up across bands. More than 90% of sourcing came from internal channels (trade-ins, We Buy Your Car, loaner conversions, lease returns).
Improvement in New Vehicle Profitability and Inventory Discipline
New vehicle gross profit per unit sequentially improved from Q3 to Q4 to about $2,400 per unit (up ~$100 or ~5% sequentially). Floor plan interest expense improved (floor plan interest down ~$30 million or ~14% for the full year) and year-end leverage was stable at ~2.44x EBITDA, within the 2–3x target range.
Negative Updates
Weak Fourth-Quarter New Vehicle Sales
Same-store new vehicle unit sales declined ~10% in Q4 (total new unit sales down ~9% for the quarter). Sales of battery electric vehicles fell ~60% year-over-year in Q4 and hybrid powertrain vehicles declined ~10%, driven by pull-ahead effects and reduced OEM dealer incentives.
Quarterly Revenue and Gross Profit Pressure
Total Q4 revenue was $6.9 billion versus $7.2 billion a year ago (down ~4.2%). Q4 gross profit declined ~2% year-over-year to $1.2 billion, and adjusted operating income decreased 7% versus the prior-year quarter.
Q4 Net Income and EPS Mixed Results
Fourth-quarter adjusted net income was $186 million versus $199 million a year ago (down ~6.5%), although adjusted EPS for the quarter was $5.08 (up ~2% YoY) due to the share count reduction from buybacks.
Used-Vehicle Retail Softness in Q4 and GPUs
Fourth-quarter used retail unit sales decreased 5% on a same-store basis and used vehicle profit was down 6% for the quarter; Q4 used vehicle profit per unit was $14.38 (below prior-year quarter). Management noted lower profitability in the second half versus earlier quarters with Q4 being the low mark for used GPU in 2025.
Higher SG&A Ratio in Q4 Due to Investments
Adjusted SG&A was 68% of gross profit in Q4 (full-year 67.3%). The rise reflected increased advertising targeted at upper-funnel demand creation and higher service loaner fleet costs to support aftersales and used inventory — incremental investments that weighed on near-term margins.
Inventory and Supply Constraints
New vehicle days' supply rose to ~45 days (up 6 days YoY). Used inventory was 25,700 units at December and management expects inventory to increase heading into peak selling season. Industry used supply remains tight, pressuring acquisition costs and margins.
Macro / Market Headwinds and 2026 Outlook
Management expects the overall market to be slightly down in 2026 versus 2025 and flagged ongoing affordability pressure and potential demand headwinds (monthly payment sensitivity). They expect used market constraints to persist but improve year-over-year and see new-unit profitability roughly stable near current levels.
Company Guidance
AutoNation guided that 2026 should move roughly with the market (management sees the market “slightly down” vs. 2025) with new‑vehicle profitability expected to remain fairly stable at 2025 levels (Q4 new‑vehicle profit ≈ $2,400/unit), the used market remaining constrained but improving year‑over‑year (Dec used inventory 25,700 units; Q4 used GPU $14.38, full‑year $15.55), and aftersales targeted to sustain mid‑single‑digit revenue and gross‑profit growth (aftersales gross profit ~record Q4 ≈ $600M; full‑year gross margin ~48.3–48.7%). Management also expects AN Finance to continue scaling (portfolio >$2.2B year‑end, 2025 originations ~$1.76B, funded status to exceed ~90% after the recent ~$750M ABS at ~4.25% and 98.7% advance), delinquency to normalize toward ~3%, and profitability to improve from recent quarterly run rates; capital allocation will remain balanced with CapEx roughly in line with 2025 (~$309M), continued disciplined M&A (2025 closed ~$460M) and buybacks funded by strong adjusted free cash flow (~$1.05B in 2025, up ~39%) while keeping leverage around ~2.4x EBITDA (target 2–3x).AutoNation Financial Statement Overview
Summary
Profitability remains positive but has clearly cooled from peak-cycle levels, with net margins compressing meaningfully since 2022 and revenue slightly down recently. Leverage was elevated in 2022–2024, and cash flow quality weakened with a 2024 free-cash-flow shortfall and multi-year OCF decline, which lowers the financial strength score despite some improvement in 2025.Income Statement
Revenue has been essentially flat to modestly down recently (2025 down ~1% after a slight decline in 2024), while profitability has compressed from the 2021–2022 peak. Net margin fell from ~5.1% (2022) to ~2.6% (2024) and ~2.3% (2025), with a similar step-down in operating profitability. Strengths include still-positive earnings and historically strong profitability in 2021–2022; weakness is clear margin pressure and declining earnings power versus prior years.62
Positive
Balance Sheet
Leverage is elevated in the most recent complete balance sheets: debt-to-equity was ~3.1–3.7x in 2022–2024, which increases risk if auto demand weakens or credit conditions tighten. Returns on equity are strong (driven in part by leverage), running ~28% (2024) and higher in earlier years. The 2025 balance sheet shows zeros for debt and equity alongside very low assets, which appears inconsistent with prior years and limits confidence in that specific period’s balance sheet read-through.58
Neutral
Cash Flow
Cash generation has become more volatile and weakened versus 2021–2022. Operating cash flow dropped from ~$1.6B+ (2021–2022) to ~$724M (2023) and ~$315M (2024), and free cash flow swung from strongly positive (2020–2023) to slightly negative in 2024. 2025 shows positive free cash flow (~$112M) and it exceeds net income in that year, but the sharp multi-year decline and the 2024 negative free cash flow are meaningful red flags for consistency.45
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 27.63B | 26.77B | 26.95B | 26.98B | 25.84B |
| Gross Profit | 4.70B | 4.79B | 5.13B | 5.27B | 4.95B |
| EBITDA | 1.50B | 1.60B | 1.92B | 2.21B | 2.12B |
| Net Income | 649.10M | 692.20M | 1.02B | 1.38B | 1.37B |
Balance Sheet | |||||
| Total Assets | 14.39B | 13.00B | 11.98B | 10.06B | 8.94B |
| Cash, Cash Equivalents and Short-Term Investments | 58.60M | 101.50M | 60.80M | 72.60M | 60.40M |
| Total Debt | 10.18B | 8.65B | 8.12B | 6.42B | 4.95B |
| Total Liabilities | 12.05B | 10.54B | 9.77B | 8.01B | 6.57B |
| Stockholders Equity | 2.34B | 2.46B | 2.21B | 2.05B | 2.38B |
Cash Flow | |||||
| Free Cash Flow | -197.50M | -13.80M | 313.70M | 1.34B | 1.41B |
| Operating Cash Flow | 111.90M | 314.70M | 724.00M | 1.67B | 1.63B |
| Investing Cash Flow | -687.00M | 12.30M | -569.90M | -479.30M | -460.30M |
| Financing Cash Flow | 557.50M | -300.60M | -172.50M | -1.15B | -1.68B |
AutoNation Technical Analysis
Negative
196.77
Price Trends
210.13
Negative
208.85
Negative
205.74
Negative
Market Momentum
-3.08
Positive
39.09
Neutral
22.27
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AN, the sentiment is Negative. The current price of 196.77 is below the 20-day moving average (MA) of 207.07, below the 50-day MA of 210.13, and below the 200-day MA of 205.74, indicating a bearish trend. The MACD of -3.08 indicates Positive momentum. The RSI at 39.09 is Neutral, neither overbought nor oversold. The STOCH value of 22.27 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AN.
AutoNation Risk Analysis
AutoNation disclosed 16 risk factors in its most recent earnings report. AutoNation reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
AutoNation Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | $11.08B | 11.90 | 16.56% | 3.14% | 2.25% | 8.92% | |
62 Neutral | $4.47B | 8.90 | 13.31% | ― | 8.07% | 60.95% | |
62 Neutral | $4.00B | 13.37 | 11.10% | 0.49% | 19.45% | -24.27% | |
62 Neutral | $7.40B | 9.46 | 12.34% | 0.64% | 8.56% | 17.84% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
60 Neutral | $6.47B | 14.74 | 7.46% | ― | 0.12% | 2.78% | |
58 Neutral | $7.12B | 11.79 | 27.05% | ― | 6.06% | -1.71% |
* Consumer Cyclical Sector Average
AN
AutoNation
196.77
13.28
7.24%
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220.48
-55.06
-19.98%
KMX
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42.32
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GPI
Group 1 Automotive
332.92
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-27.24%
LAD
Lithia Motors
284.97
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-17.08%
PAG
Penske Automotive Group
163.16
-0.38
-0.23%
AutoNation Corporate Events
Business Operations and StrategyPrivate Placements and Financing
AutoNation Completes $600 Million Senior Notes Sale
Neutral
Nov 14, 2025
On November 14, 2025, AutoNation, Inc. completed the sale of $600 million in 4.450% Senior Notes due 2029, following an underwriting agreement with several financial institutions. The issuance, part of a strategic financial maneuver, is expected to impact the company’s financial operations and its relationships with underwriters, who may continue to engage in commercial dealings with AutoNation.
The most recent analyst rating on (AN) stock is a Buy with a $250.00 price target. To see the full list of analyst forecasts on AutoNation stock, see the AN Stock Forecast page.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.