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Autonation (AN)
NYSE:AN
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AutoNation (AN) AI Stock Analysis

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AN

AutoNation

(NYSE:AN)

Rating:69Neutral
Price Target:
$215.00
▲(9.55%Upside)
AutoNation's stable revenue and strong earnings growth are overshadowed by financial risks due to high leverage and negative cash flow. The recent securitization transaction and positive earnings call provide some optimism but are balanced by challenging technical indicators and modest valuation.
Positive Factors
Electric Vehicle Sales
Battery Electric Vehicle sales were up nearly 50% from a year ago, reflecting strong demand and manufacturer incentives.
Revenue Growth
AutoNation reported a revenue increase of 3% year-over-year to $6.7 billion, surpassing consensus expectations.
Share Buybacks
Capital allocation focus remains on share buybacks, with significant spending on share repurchases.
Negative Factors
Gross Profit Margins
Gross profit margins decreased by 30 basis points year-over-year to 18.2%.
Operating Margins
Operating margins were softer, decreasing from the previous year.
SG&A Expenses
SG&A as a percentage of gross profit increased to 67.5% from 65.6% compared to the previous year.

AutoNation (AN) vs. SPDR S&P 500 ETF (SPY)

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 makes money primarily through the sale of new and used vehicles, which is the largest component of its revenue. The company also generates significant income from its after-sales services, including vehicle maintenance and repairs, which provide a steady stream of recurring revenue. Additionally, AutoNation earns money through finance and insurance products, such as arranging vehicle financing, selling extended service contracts, and offering other related products. These finance and insurance activities contribute substantially to the company's profitability. AutoNation's extensive network of dealerships and strategic partnerships with automotive manufacturers enhance its ability to attract a broad customer base and drive sales across its various revenue streams.

AutoNation Earnings Call Summary

Earnings Call Date:Jul 25, 2025
(Q2-2025)
|
% Change Since: -1.99%|
Next Earnings Date:Oct 24, 2025
Earnings Call Sentiment Positive
The earnings call reflected strong performance across key areas such as revenue growth, AutoNation Finance expansion, and record After-Sales results. However, challenges like the CDK outage, tariff-related shifts, and impairment charges were notable concerns.
Q2-2025 Updates
Positive Updates
Record Revenue and Growth
Total revenue for the quarter was $7 billion, an increase of 8% from a year ago on both the total and same-store basis. Gross profit margin of 18.3% of revenue was up 40 basis points from a year ago.
Significant Growth in AutoNation Finance
Originations doubled from a year prior, with approximately $464 million in loans originated in the second quarter, bringing the year-to-date originations to $924 million.
Improved Customer Financial Services
Customer Financial Services gross profit increased 13%, with more than two products attached per vehicle and a stable finance penetration rate at nearly 75%.
New Vehicle Sales and Profitability
New vehicle unit volumes increased by 7% from a year ago. New vehicle unit profitability averaged $2,785 for the quarter, in line with the first quarter.
After-Sales Record Performance
After-Sales business delivered record revenue and grew gross profit by more than 12%, with gross profit margins expanding by 100 basis points to record levels.
Negative Updates
Impact of CDK Outage and Tariff-Related Volume Shift
Second quarter 2024 operating results were adversely impacted by the CDK outage, and Q2 2025 was impacted by tariff-related volume shifts.
Noncash Impairment Charge
GAAP reported numbers included a noncash impairment charge of $123 million after tax, primarily affecting the Mobile Service business and specific franchise rights.
Challenges with Mobile Service Business
Developing an independent mobile service offering faced challenges, leading to adjustments in growth expectations and a technical accounting treatment.
Company Guidance
During AutoNation Inc.'s Q2 2025 earnings call, the company reported significant growth in several key areas. New vehicle sales increased by 8%, with the Domestic segment seeing a 19% rise year-over-year and a 14% increase from Q1. Used vehicle gross profit rose 13% from the previous year, driven by a 6% increase in unit sales and stable profitability. Customer Financial Services also experienced a 13% growth in gross profit. Additionally, AutoNation Finance's originations doubled compared to the previous year, with a notable asset-backed securitization. The company's total revenue reached $7 billion, marking an 8% increase. Adjusted earnings per share grew by 37% year-over-year, supported by share repurchases. The company maintains a strong focus on expanding its technician workforce, with headcount up by 3% from the previous year.

AutoNation Financial Statement Overview

Summary
AutoNation's financial performance shows stable revenue with consistent gross profitability, but challenges in net margins and cash management. High leverage is a concern, impacting financial stability.
Income Statement
75
Positive
AutoNation's income statement shows a stable revenue base with a slight growth in the TTM period. Gross Profit Margin stands at 17.83% for TTM, showing consistent profitability. However, there is a decline in Net Profit Margin from 3.88% in 2024 to 2.51% in TTM, indicating rising costs or expenses. The EBIT and EBITDA margins are stable, but lower compared to earlier years, reflecting operational efficiency challenges.
Balance Sheet
68
Positive
The balance sheet reveals a relatively high Debt-to-Equity Ratio, increasing from 3.52 in 2024 to 9.86 in TTM, highlighting significant leverage. The company maintains a moderate Equity Ratio of 18.03% in TTM, suggesting a dependence on debt financing. With a declining Return on Equity from 28.17% in 2024 to 28.19% in TTM, profitability on shareholder equity shows slight improvement but may be strained by high leverage.
Cash Flow
60
Neutral
Cash flow analysis shows a concerning decline in Free Cash Flow, turning negative in TTM, which could affect liquidity and operational flexibility. The Operating Cash Flow to Net Income Ratio reduced significantly, indicating challenges in converting income into cash. Free Cash Flow to Net Income Ratio is negative, signaling potential cash management issues.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue26.77B26.95B26.98B25.84B20.39B
Gross Profit4.79B5.13B5.27B4.95B3.57B
EBITDA1.60B1.87B2.21B2.09B842.70M
Net Income692.20M1.02B1.38B1.37B381.60M
Balance Sheet
Total Assets13.00B11.98B10.06B8.94B9.89B
Cash, Cash Equivalents and Short-Term Investments59.80M60.80M72.60M60.40M569.60M
Total Debt8.65B8.03B6.42B4.95B5.19B
Total Liabilities10.54B9.77B8.01B6.57B6.65B
Stockholders Equity2.46B2.21B2.05B2.38B3.24B
Cash Flow
Free Cash Flow-13.80M313.70M1.34B1.41B1.05B
Operating Cash Flow314.70M724.00M1.67B1.63B1.21B
Investing Cash Flow12.30M-569.90M-479.30M-460.30M-73.70M
Financing Cash Flow-300.60M-172.50M-1.15B-1.68B-606.70M

AutoNation Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price196.26
Price Trends
50DMA
196.02
Positive
100DMA
182.70
Positive
200DMA
178.81
Positive
Market Momentum
MACD
0.81
Positive
RSI
44.12
Neutral
STOCH
26.19
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AN, the sentiment is Neutral. The current price of 196.26 is below the 20-day moving average (MA) of 205.62, above the 50-day MA of 196.02, and above the 200-day MA of 178.81, indicating a neutral trend. The MACD of 0.81 indicates Positive momentum. The RSI at 44.12 is Neutral, neither overbought nor oversold. The STOCH value of 26.19 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for AN.

AutoNation Risk Analysis

AutoNation disclosed 17 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

Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
76
Outperform
$11.58B12.3418.57%2.78%3.29%-1.29%
75
Outperform
$5.65B12.0915.72%0.44%19.75%-10.74%
74
Outperform
$4.51B10.9111.92%11.11%-23.41%
69
Neutral
$7.66B12.7327.24%3.15%-12.49%
67
Neutral
$7.99B9.6712.95%0.70%12.96%-6.25%
67
Neutral
$2.69B17.5415.99%1.77%4.48%-16.26%
65
Neutral
€20.20B10.137.83%3.17%0.85%-38.46%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
AN
AutoNation
196.26
16.85
9.39%
ABG
Asbury
229.20
-27.99
-10.88%
GPI
Group 1 Automotive
425.54
77.70
22.34%
LAD
Lithia Motors
307.07
42.19
15.93%
PAG
Penske Automotive Group
170.25
10.13
6.33%
SAH
Sonic Automotive
76.36
20.08
35.68%

AutoNation Corporate Events

Private Placements and Financing
AutoNation Completes $700 Million Securitization Transaction
Positive
May 21, 2025

On May 21, 2025, AutoNation announced the completion of a $700 million asset-backed securitization transaction through its captive finance company, AutoNation Finance. This inaugural transaction involved the issuance of seven classes of notes with a weighted-average interest rate of 4.90%, secured by $714.3 million of automobile loan contracts. The net proceeds of approximately $696.4 million will be used to reduce existing debt and support corporate purposes. The transaction was well-received, allowing AutoNation to secure a competitive interest rate and increase the offering size by $200 million, enhancing its capital allocation flexibility.

The most recent analyst rating on (AN) stock is a Buy with a $215.00 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.Date of analysis: Jul 29, 2025