AN - Embedded Expectations Analysis - 2018 12 07
AutoNation, Inc. (AN:USA) currently trades below recent averages relative toUAFRS-based (Uniform) Earnings, with an 18.4x Uniform P/E. At these levels, the market has muted expectations for the firm, and management has concerns about their search for a new CEO, sales and performance against comps, investments, and their customer care business
Specifically, management may be concerned about their CEO search, and about underperforming retail sales. Additionally, they may be concerned about the sustainability of their current favorable tax rates, and may lack confidence in their ability to drive strong returns from their customer care business. Moreover, they may lack confidence in their ability to meet year-over-year sales comparisons in Texas, which benefitted from strong replacement demand after Hurricane Harvey last year, and may be concerned about the progress of their five AutoNation USA stores. Furthermore, they may lack confidence in their ability to continue driving their recommissioning costs lower, and in their investment in Vroom, an online car retailer
AutoNation, through its subsidiaries, is an automotive retailer. The company provides a range of automotive products and services, including new vehicles, used vehicles, parts and service, which includes automotive repair and maintenance services as well as wholesale parts and collision businesses, and automotive finance and insurance products, which include vehicle service and other protection products, and the arranging of financing for vehicle purchases through third-party finance sources. The company owns and operates new vehicle franchises from stores located in the United States, in main metropolitan markets in the Sunbelt region. The company has three segments: Domestic, Import, and Premium Luxury.
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