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AutoNation (AN) to Post Q1 Earnings: What’s in the Cards?


AutoNation, Inc. AN is expected to report first-quarter 2017 results, before the market opens on Apr 25. In the last quarter, the company posted a negative earnings surprise of 1.04%. Let’s see how things are shaping up for this announcement.

Factors Influencing this Quarter

AutoNation follows an aggressive share repurchase policy, boosting shareholder returns. In 2016, the company repurchased 10.5 million shares for $497 million. As of Feb 1, it had approximately $299 million remaining under the share repurchase program and around 101 million shares outstanding.

AutoNation also focuses on expansion through acquisitions. In Oct 2016, the company announced the acquisition of three Premium Luxury franchises and one collision center as well as the award of three Premium Luxury franchise add-points. The incremental annual revenue from these is expected to be around $430 million, once the add-points are fully operational.

AutoNation has also announced the next phase of its comprehensive brand extension rollout, which was announced in 2013. The new phase includes the company’s USA stand-alone pre-owned vehicle sales and service centers, branded parts and accessories, expansion of collision centers as well as AutoNation’s Auto Auctions.

However, the company's financial position has been deteriorating, with the cash balance falling. The used vehicles margin is also under pressure due to the previously held inventory.

Earnings Whispers

Our proven model does not conclusively show that AutoNation is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below:

Zacks ESP: The Earnings ESP for AutoNation is 0.00% because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 91 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

AutoNation, Inc. Price and EPS Surprise

AutoNation, Inc. Price and EPS Surprise | AutoNation, Inc. Quote

Zacks Rank: AutoNation currently carries a Zacks Rank #3, which when combined with a 0.00% ESP, makes surprise prediction difficult.

We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Price Performance

In the last three months AutoNation’s share price declined 16.3%, underperformed the Zacks categorized Retail/Wholesale Auto/Truck industry’s 9.8% fall.

Stocks to Consider

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Cooper Tire & Rubber Company CTB has an Earnings ESP of +14.49% and a Zacks Rank #3. The company is slated to report first-quarter 2017 results on Apr 27. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ferrari N.V. RACE has an Earnings ESP of +1.92% and a Zacks Rank #3. The company’s first-quarter 2017 financial results are expected for release on May 4.

General Motors Company GM has an Earnings ESP of +4.86% and a Zacks Rank #3. The company is scheduled to report first-quarter 2017 financial numbers on Apr 28.

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