Text size
AutoNation reported nearly $7 billion in revenue for the latest quarter.
Courtesy of AutoNation
AutoNation
posted profits that were ahead of Wall Street estimates as demand for new cars and repairs and maintenance services improved.
But the stock lost ground as margins fell and management predicted further declines.
The seller of used and new cars (ticker: AN) said adjusted earnings for the second quarter were $6.29 per share. Analysts tracked by
FactSet
had penciled in $5.91 per share. Revenue for the quarter came in at $6.9 billion, slightly ahead of the $6.8 billion analysts had estimated.
New-vehicle and after-sales revenue rose in the latest quarter versus last year, offsetting a decrease in sales of used vehicles as “consumer demand for personal vehicle ownership remains strong,” said CEO Mike Manley.
Still, AutoNation’s stock fell 10% to $158.55 in midday trading on Friday.
Gross profit per vehicle was down 24.4% from a year earlier as the company offered discounts to attract consumers burdened by high monthly payments on cars. In a call discussing the earnings, AutoNation management said that they expect margins will continue to moderate, partly to maintain current demand and partly as inventory levels continue to increase as fewer vehicles are sold at the sticker price.
AutoNation also reported higher selling, general, and administrative expenses at 63% of second-quarter gross profit, compared with 61% in the quarter earlier and 55% a year ago.
On the call, executives said spending on advertising increased last quarter. While that element is expected to moderate, investors can anticipate higher costs overall to reflect investments in technology and new business initiatives as the company expands what it offers to customers, they said.
Write to Karishma Vanjani at [email protected]
Source: https://www.barrons.com/articles/autonation-stock-earnings-car-sales-15df0ada?siteid=yhoof2&yptr=yahoo