Financial Data and Key Metrics Changes - AutoNation reported a solid fourth quarter with a 3% revenue growth and an 8% adjusted net income growth, leading to a 16% increase in adjusted earnings per share [3][11] - Adjusted free cash flow exceeded $1 billion, up approximately 39% from 2024 [3][9] - Adjusted net income for the full year increased by 8% to $757 million, while adjusted EPS was $20.22, a 16% increase from 2024 [16][17] Business Line Data and Key Metrics Changes - Same-store unit sales of new vehicles decreased by 10% in Q4, with a 60% decline in battery electric vehicles and a 10% decline in hybrid powertrain vehicles [5][17] - Used vehicle gross profit increased by 5% for the full year, with retail profitability per unit in line with 2024 [6][19] - Customer Financial Services (CFS) unit profitability grew by 8% year-over-year, with record gross profit per unit [7][21] Market Data and Key Metrics Changes - The fourth quarter faced tougher sales comparisons due to a surge in sales in Q4 2024, resulting in a light vehicle SAR of 16.7 million [4] - New vehicle inventory amounted to 45 days of supply, up 6 days from the previous year [18] - The used vehicle market remains tight, with a focus on acquiring vehicles through internal channels [20] Company Strategy and Development Direction - AutoNation expanded its presence in key markets by acquiring several dealerships, including Ford and Mazda in Denver and Audi and Mercedes in Chicago [10][29] - The company aims to maintain a balanced capital allocation strategy, with significant investments in both CapEx and share repurchases [29][30] - The focus remains on improving after-sales performance and customer retention through enhanced service offerings [8][79] Management's Comments on Operating Environment and Future Outlook - Management expects the market to be slightly down in 2026 compared to 2025, with potential benefits from tax changes and depreciation [32] - The used vehicle market is anticipated to show year-over-year improvements, while new unit profitability is expected to remain stable [32][33] - Affordability pressures are a key concern, with expectations of OEMs providing more affordable models to address consumer sensitivity to monthly payments [77][78] Other Important Information - The company deployed over $1.5 billion in capital, with half reinvested in the business and half returned to shareholders through share repurchases [29][30] - The balance sheet remains healthy, with leverage largely unchanged from the prior year at 2.44x EBITDA [30] Q&A Session Summary Question: Regarding the new car business and weaker unit numbers - Management noted a reduction in OEM dealer-facing incentives and a significant drop in EV volume, which contributed to the decline in unit sales [38][40] Question: On AutoNation Finance's profitability cadence - Management expressed confidence in continued profitability growth, with a strong starting point for 2026 [42][43] Question: Capital spending and M&A market outlook - Management indicated that 2026 capital spending levels would be similar to 2025, with ongoing opportunities in the M&A market [52][54] Question: Impact of lease returns on dealership business - Management believes OEMs have prepared for increased lease returns and expects this to benefit the dealership business [71][73] Question: Consumer credit availability and after-sales behavior - Management acknowledged affordability pressures and noted that consumer behavior in after-sales has become more price-sensitive [77][79] Question: Used market strategy and mix shifts - Management highlighted strong performance in higher-priced used vehicles and the need to balance inventory across price segments [82][83]

Core Viewpoint - AutoNation reported quarterly earnings of $5.08 per share, exceeding the Zacks Consensus Estimate of $4.91 per share, and showing an earnings surprise of +3.42% [1][2] Financial Performance - The company posted revenues of $6.93 billion for the quarter ended December 2025, which was 2.98% below the Zacks Consensus Estimate and down from $7.21 billion a year ago [2] - Over the last four quarters, AutoNation has surpassed consensus EPS estimates four times and topped revenue estimates three times [2] Stock Performance - AutoNation shares have declined approximately 1.2% since the beginning of the year, while the S&P 500 has decreased by 0.7% [3] - The current Zacks Rank for AutoNation is 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The consensus EPS estimate for the upcoming quarter is $4.92 on revenues of $6.72 billion, and for the current fiscal year, it is $21.19 on revenues of $28.47 billion [7] - The trend of earnings estimate revisions for AutoNation was mixed ahead of the earnings release, which could change following the recent report [6] Industry Context - The Automotive - Retail and Whole Sales industry is currently in the top 38% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact AutoNation's stock performance [5]

Fourth Quarter 2025 Earnings Release February 6, 2026 1 Forward-Looking Statements This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Words such as "anticipates," "expects," "estimates," "intends," "goals," "targets," "projects," "plans," "believes," ...

AutoNation reported lower fourth-quarter revenue, weighed down by fewer comparable sales of both new and used vehicles. ...

Revenue Performance - Fourth quarter 2025 revenue was $6.9 billion, a decrease of 4% year-over-year, while full year revenue increased by 3% to $27.6 billion[2][9] - Total revenue for Q4 2025 was $6,929.2 million, a decrease of 3.9% compared to Q4 2024's $7,213.2 million[26] - Total consolidated revenue for Q4 2025 was $6,929.2 million, a decrease of 3.9% compared to $7,213.2 million in Q4 2024[31] - Total revenue for Q4 2025 was $6,791.8 million, a decrease of 5.4% compared to Q4 2024's $7,181.7 million[42] Earnings and Profitability - Fourth quarter 2025 diluted EPS was $4.70, up 1% from $4.64 a year ago, and full year diluted EPS was $17.04, an increase of 1% from $16.92[2][9] - Adjusted EPS for Q4 2025 was $5.08, a 2% increase from $4.97, and for the full year, it rose 16% to $20.22 from $17.46[5][12] - Net income for the twelve months ended December 31, 2025, was $649.1 million, down from $692.2 million in 2024[26] - Operating income for 2025 was reported at $1,239.9 million, a decrease from $1,305.5 million in 2024, reflecting a decline of approximately 5.0%[38] - Adjusted net income for 2025 was $770.3 million, compared to $714.0 million in 2024, reflecting an increase of about 7.9%[39] Vehicle Sales - Same-store revenue decreased by 5% in Q4 2025, driven by lower unit sales of new and used vehicles, despite a 4% increase in After-Sales revenue[4][8] - Retail vehicle unit sales for new vehicles decreased by 9.2% to 64,841 units in Q4 2025 compared to 71,434 units in Q4 2024[28] - New vehicle revenue decreased by 8.8% to $3,441.3 million in Q4 2025 from $3,775.2 million in Q4 2024[28] - Used vehicle revenue was $1,890.9 million in Q4 2025, down 1.1% from $1,911.3 million in Q4 2024[28] - Retail vehicle unit sales for new vehicles fell by 10.2% to 63,873 units in Q4 2025 compared to 71,158 units in Q4 2024[42] Cost and Expenses - Total cost of sales for the twelve months ended December 31, 2025, was $22,682.9 million, an increase from $21,980.0 million in 2024[26] - Total SG&A expenses for 2025 were $3,362.2 million, compared to $3,263.9 million in 2024, marking an increase of approximately 3.0%[38] Cash Flow and Liquidity - Adjusted free cash flow for 2025 was $1.05 billion, or 125% of adjusted net income[13] - As of December 31, 2025, AutoNation had $1.8 billion in liquidity, including $59 million in cash and $1.7 billion available under its revolving credit facility[17] - Cash paid for acquisitions in Q4 2025 was $110.7 million, with total cash paid for acquisitions for the year reaching $459.1 million[34] Shareholder Returns - The company repurchased 4.1 million shares for $785 million in 2025, representing a 10% reduction in shares outstanding[5][15] - Stock repurchases in Q4 2025 amounted to $350.0 million, with 1.7 million shares repurchased, compared to $104.4 million and 0.6 million shares in Q4 2024[34] Financial Ratios and Metrics - The leverage ratio as of December 31, 2025, was 2.44x, well below the covenant limit of 3.75x, indicating strong financial health[34] - The effective tax rate for 2025 was 26.6%, up from 24.5% in 2024, showing an increase of 8.5%[38] Acquisitions and Growth - In December 2025, AutoNation acquired a Toyota store in Baltimore, along with other acquisitions totaling over $650 million in annual revenues[14] - The company plans to focus on expanding its parts and service offerings to enhance profitability in the upcoming quarters[29] Other Financial Highlights - Cybersecurity insurance recoveries of $80 million were received in 2025, impacting the overall financial results positively[39] - The company reported a significant increase in auto loans receivable, net, rising to $2,140.2 million in 2025 from $1,057.1 million in 2024[34]

Core Viewpoint - AutoNation, Inc. is a leading automotive retailer in the U.S. with a diverse range of products and services, operating through three segments: Domestic, Import, and Premium Luxury [1] Price Target Fluctuations - The consensus price target for AutoNation has fluctuated over the past year, starting at $245 a year ago, increasing to $250 last quarter, and then decreasing to $233.5 last month, indicating a more conservative short-term outlook [2][6] Earnings Expectations - AutoNation is anticipated to surpass earnings estimates in its upcoming report, supported by a strong track record of exceeding expectations, which could drive the stock price higher [3][6] Market Optimism and Performance - As inflation concerns ease, brokers are optimistic about AutoNation, with significant gains reported in new and used vehicle sales, finance, insurance, and parts/service sectors, contributing to improved profitability and cash flow [4] - Despite the optimism, risks such as margin pressures and rising auto loan delinquencies could impact AutoNation's performance [4][6] Investment Considerations - Investors should consider market conditions, company performance, and economic factors when evaluating AutoNation's stock, with upcoming earnings reports and company announcements expected to provide further insights [5]

Core Viewpoint - AutoNation, Inc. is expected to release its quarterly earnings on February 6, 2026, with Wall Street estimating an EPS of $4.91 and projected revenue of approximately $7.21 billion, despite anticipated year-over-year declines in earnings due to lower revenues for the quarter ending December 2025 [1][2] Financial Metrics - The company's price-to-earnings (P/E) ratio is approximately 12.20, indicating how the market values its earnings [3] - AutoNation's price-to-sales ratio is about 0.28, reflecting its market value relative to sales [3] - The enterprise value to sales ratio is approximately 0.62, while the enterprise value to operating cash flow ratio is notably high at around 156.70, indicating the company's valuation in relation to its cash flow from operations [4] - The earnings yield is approximately 8.20%, providing insight into the return on investment for shareholders [4] Leverage and Liquidity - AutoNation's debt-to-equity ratio is quite high at about 3.90, suggesting a heavy reliance on debt to finance operations [5] - The current ratio is approximately 0.79, indicating the company's ability to cover short-term liabilities with short-term assets [5]

Core Insights - Zacks Premium offers various tools for investors to enhance their stock market strategies, including daily updates, research reports, and stock screens [1] Zacks Style Scores - The Zacks Style Scores are designed to help investors select stocks with the highest potential to outperform the market within 30 days, rated from A to F based on value, growth, and momentum [2] - Stocks with a Value Score focus on identifying undervalued stocks using financial ratios like P/E and Price/Sales [3] - The Growth Score emphasizes a company's future prospects by analyzing earnings, sales, and cash flow [4] - Momentum Score targets stocks with favorable price trends, utilizing metrics like one-week price change and monthly earnings estimate changes [5] - The VGM Score combines all three Style Scores, providing a comprehensive indicator for stock selection [6] Zacks Rank - The Zacks Rank is a proprietary model that uses earnings estimate revisions to simplify portfolio building, with 1 (Strong Buy) stocks historically yielding an average annual return of +23.83% since 1988, outperforming the S&P 500 [7][8] - Investors are encouraged to select stocks with a Zacks Rank of 1 or 2 and Style Scores of A or B for optimal success [9] - The direction of earnings estimate revisions is crucial; stocks with lower ranks but high Style Scores may still face downward price pressure [10] Company Spotlight: AutoNation - AutoNation, Inc. is a leading automotive retailer in the U.S., providing vehicle sales, maintenance, parts, and financing services [11] - Currently rated 3 (Hold) by Zacks, AutoNation has a VGM Score of A and a Momentum Style Score of A, with a recent share price increase of 0.1% [12] - Analysts have recently revised AutoNation's earnings estimate upwards, with a Zacks Consensus Estimate of $20.06 per share and an average earnings surprise of +10.9%, making it a notable option for investors [12]

Core Viewpoint - AutoNation Inc. is highlighted as a top investment opportunity in the used-car sector, with a recent upgrade from JPMorgan indicating strong confidence in its earnings potential and strategic growth initiatives [1][3]. Group 1: Analyst Upgrades and Market Position - JPMorgan upgraded AutoNation from Neutral to Overweight, setting a price target of $235, reflecting confidence in the company's earnings trajectory compared to peers in the auto retail sector [1][3]. - The investment bank emphasized AutoNation's consistent share buybacks and strong balance sheet, which enhance shareholder value [3]. Group 2: Strategic Growth Initiatives - AutoNation is expanding its market presence through the acquisition of Jerry's Toyota for $123 million, which is projected to generate approximately $123 million in annual revenue from 2,600 vehicle sales [4]. - The company operates over 300 locations across the U.S., providing a wide range of services including financing, insurance, maintenance, and vehicle reconditioning [5]. Group 3: Competitive Advantages - AutoNation's brand mix and focus on the U.S. market are expected to yield organic performance that is in line or slightly better than its competitors [3].

Core Viewpoint - The Zacks Auto Retail and Wholesale industry is experiencing a mixed operating environment, with challenges such as slowing vehicle sales, high borrowing costs, and affordability constraints, while some companies are positioned to outperform through strategic acquisitions and digital initiatives [1] Industry Overview - The auto retail and wholesale industry is crucial for delivering vehicles and parts to consumers, operating through dealership networks and retail chains [2] - The industry's performance is closely tied to economic conditions, with consumer spending on vehicles typically increasing during economic growth and declining during downturns [2] - The COVID-19 pandemic has accelerated the shift towards online tools and e-commerce, a trend expected to continue [2] Factors Shaping Industry Dynamics - U.S. vehicle sales are projected to decline, with total new vehicle sales expected to be around 15.8 million units in 2026, a 2.4% year-over-year decrease, and new retail sales likely to fall 1.5% to 13.1 million units [3] - High interest rates, reduced manufacturer incentives, and tight household budgets are negatively impacting demand, while average new car prices are around $50,000 [3] - The EV market is facing uncertainty due to the loss of federal tax incentives, leading automakers to reduce EV investments and focus on gas and hybrid models [4] Strategic Buyouts - Auto retailers are actively pursuing acquisitions to expand their market reach and enhance competitive positioning, which helps diversify brand portfolios and improve operational efficiencies [5] Digitization - Dealers are investing in digital platforms to enhance customer experience, with tools like virtual showrooms and online pricing improving transparency and engagement [6] Capital Allocation - Many auto retailers are focusing on shareholder returns through share buybacks and dividend increases, supported by strong cash flow from disciplined acquisitions and cost-control initiatives [7] Industry Rank - The Zacks Auto Retail & Wholesale industry holds a Zacks Industry Rank of 89, placing it in the top 36% of nearly 245 Zacks industries, indicating strong near-term prospects [9][10] Stock Performance - The industry has underperformed compared to the S&P 500 and the Auto, Tires, and Truck sector over the past year, declining more than 1% while the S&P 500 and sector grew by 18% and 12%, respectively [12] Valuation - The industry is currently trading at an EV/EBITDA ratio of 8.36X, significantly lower than the S&P 500's 18.68X and the sector's 26.92X [15] Company Highlights - **AutoNation**: A leading automotive retailer expanding through acquisitions, with recent additions expected to generate significant annual revenues. The company is also enhancing its digital capabilities and prioritizing shareholder returns with a $1 billion share repurchase plan [19][20][21] - **Asbury Automotive Group**: A diversified auto retailer benefiting from multiple income streams and strategic acquisitions, with a focus on digitization through its Clicklane platform. The company is also expanding into higher-margin segments and reporting improved productivity from new technology [24][25][26]