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Wednesday - Stephens analysts have increased the price target on AutoNation Inc. (NYSE: NYSE:AN) shares to $200 from $195, while keeping an Equal Weight rating on the stock. The revision follows AutoNation’s announcement of their fourth-quarter earnings for 2024, which exceeded expectations. According to InvestingPro data, the stock is currently trading near its 52-week high of $198.50, with analyst targets ranging from $170 to $230.
AutoNation’s adjusted earnings per share (EPS) for the fourth quarter of 2024 were reported at $4.97, surpassing the Stephens and consensus estimates of $4.22 and $4.26 respectively. This represents a 16.6% higher result than the Street estimates. The adjusted EBITDA for the quarter was $369 million, compared to the Stephens and consensus forecasts of $326 million and $336 million, marking an approximate 10% outperformance against Stephens’ projections. InvestingPro analysis indicates that three analysts have recently revised their earnings upward for the upcoming period, suggesting continued confidence in the company’s performance. Get access to 12+ additional exclusive ProTips and comprehensive financial analysis with InvestingPro.
The company’s new unit gross profits (GPUs) for the fourth quarter were $2,969, which is $165 more than in the third quarter of 2024 but $683 and 19% lower than the same quarter the previous year. AutoNation, along with two other public auto retailers, reported adjusted EPS that outdid expectations, with AutoNation’s beat at 16.6%. The company maintains an overall "Fair" financial health score according to InvestingPro metrics, with particularly strong momentum scores despite operating with an 18.08% gross profit margin.
Looking ahead, AutoNation anticipates growth in new unit sales and expects new margins to stabilize above historical levels. Additionally, the company foresees modest increases in used unit volumes and a continued rise in after-sales gross profit dollars in 2025.
The price target increase by Stephens to $200 is based on an 8.25 multiple of their 2025 EBITDA estimate for AutoNation. The firm maintains its Equal Weight rating, suggesting that they believe the stock’s current market price is in line with their assessment of AutoNation’s value.
In other recent news, AutoNation reported a robust Q4 performance, surpassing analyst expectations. The company’s adjusted earnings per share stood at $4.97, significantly over the consensus estimate of $4.24. Additionally, AutoNation’s Q4 revenue reached $7.21 billion, exceeding the estimated $6.67 billion and marking an 8% year-on-year increase on a same-store basis.
The company also experienced growth in various segments, including a 12% increase in new vehicle same-store unit sales and a 14% increase in used vehicle same-store gross profit. Notably, AutoNation’s After-Sales and Customer Financial Services segments also showed strength, with same-store gross profit growth of 5% and 6% respectively.
AutoNation continued its share repurchase program, buying back 0.6 million shares for $104 million in Q4, and repurchasing 2.9 million shares for a total of $460 million in 2024. The company’s finance arm originated $1.1 billion in loans throughout the year, demonstrating a strong balance sheet with $1.3 billion in liquidity and a covenant leverage ratio of 2.4X by the end of the quarter. These recent developments suggest AutoNation’s strategic initiatives are positioning it well to navigate changing market conditions.
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