S&P 500   3,585.62
DOW   28,725.51
QQQ   267.26
Why This Bear Market Is Not Even Close to Being Done…
Market Wizard Who Accurately Predicted 2022 Market Collapse Has Shocking New Forecast (Ad)
EU chief: New Greece-Bulgaria gas pipeline 'means freedom'
Denmark says Nord Stream 1 natural gas pipeline has also stopped leaking
Market Wizard Who Accurately Predicted 2022 Market Collapse Has Shocking New Forecast (Ad)
Ruptured oil pipeline off California approved for repairs
Italy's Meloni vows to put national energy interests first
Market Wizard Who Accurately Predicted 2022 Market Collapse Has Shocking New Forecast (Ad)
Danes: Nord Stream 2 pipeline seems to have stopped leaking
Brazil holds historic election with Lula against Bolsonaro
S&P 500   3,585.62
DOW   28,725.51
QQQ   267.26
Why This Bear Market Is Not Even Close to Being Done…
Market Wizard Who Accurately Predicted 2022 Market Collapse Has Shocking New Forecast (Ad)
EU chief: New Greece-Bulgaria gas pipeline 'means freedom'
Denmark says Nord Stream 1 natural gas pipeline has also stopped leaking
Market Wizard Who Accurately Predicted 2022 Market Collapse Has Shocking New Forecast (Ad)
Ruptured oil pipeline off California approved for repairs
Italy's Meloni vows to put national energy interests first
Market Wizard Who Accurately Predicted 2022 Market Collapse Has Shocking New Forecast (Ad)
Danes: Nord Stream 2 pipeline seems to have stopped leaking
Brazil holds historic election with Lula against Bolsonaro
S&P 500   3,585.62
DOW   28,725.51
QQQ   267.26
Why This Bear Market Is Not Even Close to Being Done…
Market Wizard Who Accurately Predicted 2022 Market Collapse Has Shocking New Forecast (Ad)
EU chief: New Greece-Bulgaria gas pipeline 'means freedom'
Denmark says Nord Stream 1 natural gas pipeline has also stopped leaking
Market Wizard Who Accurately Predicted 2022 Market Collapse Has Shocking New Forecast (Ad)
Ruptured oil pipeline off California approved for repairs
Italy's Meloni vows to put national energy interests first
Market Wizard Who Accurately Predicted 2022 Market Collapse Has Shocking New Forecast (Ad)
Danes: Nord Stream 2 pipeline seems to have stopped leaking
Brazil holds historic election with Lula against Bolsonaro
S&P 500   3,585.62
DOW   28,725.51
QQQ   267.26
Why This Bear Market Is Not Even Close to Being Done…
Market Wizard Who Accurately Predicted 2022 Market Collapse Has Shocking New Forecast (Ad)
EU chief: New Greece-Bulgaria gas pipeline 'means freedom'
Denmark says Nord Stream 1 natural gas pipeline has also stopped leaking
Market Wizard Who Accurately Predicted 2022 Market Collapse Has Shocking New Forecast (Ad)
Ruptured oil pipeline off California approved for repairs
Italy's Meloni vows to put national energy interests first
Market Wizard Who Accurately Predicted 2022 Market Collapse Has Shocking New Forecast (Ad)
Danes: Nord Stream 2 pipeline seems to have stopped leaking
Brazil holds historic election with Lula against Bolsonaro

AutoNation Stock is Firing on All Pistons

AutoNation Stock is Firing on All Pistons

Automobile retailer AutoNation (NYSE: AN) stock is trading up 4.1% for 2022 in the 2022 bear market.  The auto retailer saw its quarterly profits hit all-time highs as it rose 34% for fiscal Q2 2022. The global chip shortage and supply chain constraints caused new vehicle sales to fall (-14%) but bolstered used car sales to rise by 13%. However, gross profits on new car sales increased 47%. The Company is seeing strength move away from entry-level $20,000 and under vehicles to the mid and premium tier vehicles. Its finance and insurance (F&I) teams have driven margin growth, and the acquisition of CIG Financial is expected to bring significant upside. The optional products, including service plans and extended warranties, continue to add to the bottom line. Unlike online auto retailer Carvana (NASDAQ: CVNA), AutoNation is profitable. It also trades at just 4.8X forward earnings versus competitor CarMax (NYSE: KMX) stock trading at $17.6X forward earnings. Prudent investors seeking exposure in the retail automobile segment can look for opportunistic pullbacks in shares of AutoNation.


Q2 Fiscal 2022 Earnings Release

On July 21, 2022, AutoNation released its fiscal second-quarter 2022 results for the quarter ending June 2022. The Company reported an adjusted earnings-per-share (EPS) profit of $6.48 excluding non-recurring items versus consensus analyst estimates of $6.22, beating estimates by $0.26. Revenues fell by (-1.6%) year-over-year (YOY) to $6.87 billion missing analyst estimates of $6.97 billion. While new vehicle revenues fell (-14%), used vehicle revenues grew 13%. New vehicle gross profit rose 47%, while used vehicle gross profit fell (-14%). Customer financial services gross profit grew 16% to $2.72 billion. The Company authorized an additional $1 billion stock buyback and announced its plan to acquire CIG Financial. AutoNation CEO Mike Manley commented, "AutoNation Associates delivered outstanding performance across all of our business sectors, leveraging our customer focus, digital capabilities, cost discipline, and capital allocation to produce record results. I am particularly pleased with our After-Sales penetration, with gross profit increasing 11% compared to last year.  This is a key profit driver that has been a particular area of focus since my arrival, and that has been structurally embedded in the organization. Additionally, today, we announced our agreement to acquire CIG Financial, an auto finance company. This acquisition addresses a key strategic next step in the evolution and expansion of our customer relationships, particularly for our used vehicle business,"

Conference Call Takeaways

CEO Manley elaborated on the quarterly performance that despite a flat YoY revenue, the Company was able to grow operating income by 5% to $558 million, and EPS was a record $6.48. Low inventory of new automobiles led to the 25% volume drop, but margins were substantially boosted by 47% YoY. Used car revenue rose 13%, but the volume dropped (-4%). Tight inventory resulted in volume reduction with entry-level vehicles priced at $20,000 or less. Mid and premium used vehicles had strong demand and rising YoY volume. Historically 40% of its sales have been in the entry-level vehicles, but the trend is favoring mid to premium level is seeing the strength. The Company improved on its used car margins, and its F&I teams continue to prove to be the best in the business. The penetration of optional products, including service plans and extended warranties, is driving performance. The acquisition of CIG Financial will bring significant upside. The Company gets 90% of its user inventory sourced from trade-ins, lease returns, and its “we will buy your car” program. The Company plans to open a new AutoNation USA store in Georgia in Q3 with plans to have 130 of these stores in the U.S. by 2026.

AN Opportunistic Pullback Levels

Using the rifle charts on the weekly and daily time frames provides a precise view of the landscape for AN stock. The weekly rifle bottomed out near the $98.27 Fibonacci (fib) level. The weekly rifle chart reversed quickly back into an uptrend as the stochastic coiled back up through the 20-band to trigger a weekly market structure low (MSL) buy signal on the breakout through $110.39. The weekly rifle chart is choppy now, with the 5-period moving average (MA) at $115.78, 15-period MA at $116.50, and the 50-period MA at $114.86. The weekly Bollinger Bands (BBs) sit at $132.71 and $95.46, respectively. The daily rifle chart also has a choppy flat chart with the 5-period MA at $114.77, 15-period MA at $115.79, 50-period MA at $115.44, and the 200-period MA at $114.75. Basically, there is a cluster of bumpers in the $114 to $117 range. The daily stochastic is attempting to cross up of the 30-band. Prudent investors can look for opportunistic pullbacks at the $113.85, $110.39 weekly MSL trigger, $109.38 fib, $106.99 fib, $104.39 fib, $102.10 fib, $100.00, $98.27 fib, $95.69 fib, and the $92.88 fib level. Upside trajectories range from the $130.13 fib level up to the $147.37 fib level.

AutoNation Stock is Firing on All Pistons

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
CarMax (KMX)
2.1372 of 5 stars
$66.02+1.3%N/A13.31Moderate Buy$101.00
Carvana (CVNA)
2.065 of 5 stars
$20.30-5.9%N/A-3.06Hold$56.25
Compare These Stocks  Add These Stocks to My Watchlist 

Should you invest $1,000 in AutoNation right now?

Before you consider AutoNation, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and AutoNation wasn't on the list.

While AutoNation currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

Jea Yu

About Jea Yu

Contributing Author: Trading Strategies

With over 20 years of active participation and analysis of the US equities, options and futures markets, Mr. Yu brings fresh insights into the workings of the financial markets. He has published four books by esteemed publishers McGraw-Hill, John Wiley & Sons, Marketplace Books and Bloomberg Press. His brainchild, the Underground Trader, was voted Forbes Best of the Web for four consecutive years under the active trader category. He has been a featured speaker all over the country at various expos and seminars who enjoys a standing-room-only reception in the largest convention halls from New York to Las Vegas. He has been quoted and featured in USA Today, Wall Street Journal, Traders Magazine and the Financial Times and various trade publications like Stocks & Commodities, Active Trader and Online Investor. Mr. Yu has a B.A. in Liberal Arts and minor in Business Administration from the University of Maryland.
Contact Jea Yu via email at JeaYu21@gmail.com.
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