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AutoNation Earnings Beat Expectations. The Stock Is Falling Anyway.AutoNation Earnings Beat Expectations. The Stock Is Falling Anyway. Barron's (Online); New York Shares of AutoNation were falling Thursday, even after the car retailer posted first-quarter results that beat analysts' expectations despite a recent downturn in auto sales amid high prices and low inventory. AutoNation (ticker: AN) reported first-quarter revenue of $6.8 billion, an increase of 14% compared to last year. Analysts were looking for $6.5 billion. Used-vehicle sales accounted for 47% of revenue, or $2.57 billion, beating expectations of $2.24 billion, according to FactSet. Net income increased to $362.1 million, or $5.78 a share, from $239.4 million, or $2.85 a share a year earlier. Analysts were expecting $5.25 a share, according to FactSet. The stock was down 3.7%, at $101.68, in recent trading. Shares had been up nearly 5% in premarket trading. Year to date, the stock is down 13%. Used-car dealerships and other auto retailers have struggled with sales recently , as demand wanes amid inflation alongside supply-chain hangups and chip shortages. That's potentially bad for auto retailers that have been counting on an increase in post-Covid-19 demand to bolster their top lines. But AutoNation's earnings tell a different story. "Consumer demand for personal vehicle ownership remains strong and our self-sustaining used vehicle business continues to meet this demand through our sourcing capabilities, selection of vehicles, footprint, digital tools, and core efficiencies," said CEO Mike Manley in a news release. Analysts were optimistic about the stock following the company's earnings Thursday. CRFA analyst Garrett Nelson maintained his Buy rating, but trimmed his12-month target price for the stock by $10 to $160 per share. "We see used vehicle results and AN's parts and service segment continuing to drive strong results for the balance of the year, which should offset concerns regarding rising interest rates. AN remains one of our top picks," he said. Analysts at Seaport Research Partners expressed similar optimism. "Make no mistake, these metrics remain strong, and we expect them to remain soas we don't foresee an imminent significant deterioration in these or any other operating metrics," analyst Glenn Chin wrote in a research note. He rates the stock at Neutral with an undisclosed target price. Carvana (CVNA) also reported earnings this week, but the results weren't quite as cheery. The online used-car dealer said it plans to raise up to $1 billion in capital and reported worse-than-expected losses in the first quarter as it attempts to manage supply-chain disruptions . Carvana stock was down 6.4%, at $ 86.57, in recent trading. It has fallen 63% year to date. |
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