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Is a Beat Likely for AutoNation (AN) This Earnings Season?

AutoNation's (AN) Q3 revenues are likely to have got a boost from higher unit sales volume and accelerated digitization efforts. Operational efficiency is also expected to have aided profits.

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This story originally appeared on Zacks

AutoNation AN is slated to release third-quarter 2021 results on Oct 21, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings and revenues is pegged at $4.35 per share and $6.49 billion, respectively.

- Zacks

The auto retailer came up with better-than-expected results in the last reported quarter on higher-than-anticipated new and used vehicle sales. In fact, the company surpassed earnings estimates in each of the trailing four quarters, with the average being 48%. This is depicted in the graph below:

AutoNation, Inc. Price and EPS Surprise

AutoNation, Inc. Price and EPS Surprise

AutoNation, Inc. price-eps-surprise | AutoNation, Inc. Quote

Trend in Estimate Revisions

The Zacks Consensus Estimate for third-quarter earnings per share has moved 2 cents north in the past seven days. The metric indicates a massive year-over-year improvement of 82.7%. Further, the Zacks Consensus Estimate for quarterly revenues suggests year-over-year growth of 20.1%.

Earnings Whispers

Our proven model predicts an earnings beat for AutoNation this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +2.45%. This is because the Most Accurate Estimate for earnings per share is pegged 11 cents higher than the Zacks Consensus Estimate.

Zacks Rank: AutoNation currently flaunts a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors at Play

Courtesy of economic recovery from the pandemic lows and preference for personal mobility, demand for vehicles has been on the rise, which is likely to have aided sales of AutoNation. We expect that the firm’s ramped-up e-commerce efforts, particularly its digital platform AutoNation Express, are likely to have aided third-quarter 2021 top and bottom lines. A sharp focus on cost discipline is also anticipated to have enhanced margins. Further, AutoNation’s store expansion initiatives are likely to have driven sales volume. During third-quarter 2021, it opened the first of two AutoNation USA stores in the Denver area, which represented the 14th outlet of the firm in Colorado.

Encouragingly, the Zacks Consensus Estimate for total retail vehicle sales for the quarter to be reported is pegged at 138,941 units, indicating an increase from 130,585 in the year-ago period, primarily led by growth in used vehicle sales. The consensus mark for total same-store sales stands at $6,105 million, suggesting growth from $5,405 million a year ago. Further, the consensus mark for gross profit for new and used vehicles segments is pegged at $176 million and $288 million, suggesting an uptick from the year-ago levels of $147 million and $167 million, respectively.

Other Stocks to Consider

Here are some auto retailers, which according to our model have the right combination of elements to come up with an earnings beat this time around.

Penske Automotive PAG has an Earnings ESP of +5.24% and a Zacks Rank #3. The stock is set to report third-quarter 2021 earnings on Oct 27.

Sonic Automotive SAH has an Earnings ESP of +8.33% and a Zacks Rank #1. The stock is set to report third-quarter 2021 earnings on Oct 28.

Group 1 Automotive GPI has an Earnings ESP of +2.78% and a Zacks Rank #2. The stock is set to report third-quarter 2021 earnings on Oct 28.



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Penske Automotive Group, Inc. (PAG): Free Stock Analysis Report

 

AutoNation, Inc. (AN): Free Stock Analysis Report

 

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