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On Friday, AutoNation Inc. (NYSE:AN), currently valued at $6.9 billion by market capitalization, maintained its position with Stephens affirming an Equal Weight rating and a price target of $175.00. According to InvestingPro data, analyst targets for the stock range from $175 to $240, with the company currently trading near its 52-week high of $198.50. The automotive retailer recently completed its first asset-backed securitization, which Stephens analysts believe is a significant step for the company’s financial arm, AutoNation Finance Trust. The issuance involved $700 million in notes, backed by over $714.3 million in auto loan contracts, resulting in a 98% advance rate. This move comes as InvestingPro analysis shows the company operates with a total debt of $9 billion and a debt-to-equity ratio of 3.76x, highlighting the importance of efficient capital management.
At the close of the first quarter of 2025, AutoNation reported having $1.45 billion in auto loans through AutoNation Finance, with $1.08 billion financed by non-recourse warehouse debt, which equates to a 74.4% advance rate. This new securitization transaction is anticipated to immediately free up approximately $164 million in capital. The company may utilize these funds for share repurchases or acquisitions, as per Stephens’ analysis.
The successful completion of this securitization is seen as a pivotal moment for the growth of AutoNation Finance. It reflects the company’s evolving strategies for sourcing and managing capital required for expansion. The weighted-average interest rate on the asset-backed securities (ABS) notes is 4.9%, which is notably lower than the 5.4% interest rate on the previously used non-recourse warehouse line of credit.
Looking ahead, assuming a continued 98% advance rate, Stephens projects that this strategy could unlock an additional $123 million of capital in 2025. This financial maneuvering by AutoNation is part of its broader efforts to optimize capital allocation and fuel its business growth. Trading at a P/E ratio of 10.7x and showing strong returns over the past five years, the company maintains a Fair Value rating according to InvestingPro, which offers detailed analysis and 8 additional key insights about AutoNation’s financial health and growth prospects through its comprehensive Pro Research Report.
In other recent news, AutoNation Inc. reported strong financial results for the first quarter of 2025, surpassing analyst expectations. The company achieved earnings per share of $4.45, exceeding the forecast of $4.27, while revenue reached $6.69 billion, above the anticipated $6.51 billion. Despite these positive earnings, AutoNation’s stock experienced a decline. The company saw a notable increase in hybrid and battery electric vehicle sales, which surged by approximately 50% year-over-year. However, adjusted net income fell by 3% compared to the previous year. AutoNation continues to expand its operations with new store openings and acquisitions. Additionally, American National Group Inc. announced a cash dividend for its Series B Preferred Stock, reflecting its commitment to providing returns to shareholders. This dividend will be paid on June 1, 2025, to shareholders on record as of May 17, 2025.
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