AN  Autonation Inc.

Exchange

NYSE

Sector

Consumer Durables

Industry

Automotive Aftermarket

Market Cap.

4.76B

Vuru Grade

34.20/100

Current Price

$47.40
-0.19 (-0.40%)

Growth Price

$39.07
Overvalued by 17.58%

Stability Price

$31.74
Overvalued by 33.05%

Company Metrics

  • P/E 11.8
  • P/S 0.22
  • P/B 1.91
  • EPS 4.02
  • Cash ROIC 6.34%
  • Cash Ratio 0.01
  • Dividend 0 / 0%
  • Avg. Vol. 1.50M
  • Shares 100.42M
  • Market Cap. 4.76B

Company Description

AutoNation, Inc., through its subsidiaries, operates as an automotive retailer in the United States. It offers various automotive products and services, including new vehicles, used vehicles, parts, automotive repair and maintenance services, and automotive finance and insurance products. The company also provides a range of vehicle maintenance, repair, paint, and collision repair services, such a... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

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Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for AN to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate AN's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$47.40 Current Price

$39.07 Growth Price (DCF)

Overvalued by 17.58%


Growth Rate Assumed by Market: 11.95%


Future Free Cash Flow Growth Rate: 1.2%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$31.74 Stability Price (EPV)

Overvalued by 33.05%


Discount Rate: 15.0%

$63.21 Book Price

Undervalued by 33.35%


Poor Cash Return on Invested Capital over the past 5 years

AN has been unable to consistently generate sufficient returns from its investments in buildings, projects and equipment. This could be due to poor management, lack of an economic moat or the capital intensive nature of the business.

AN has only created $6.34 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20132014201520162017
Free Cash Flow 323.30M 275.90M 259.60M 271.50M 230.00M
divided by
Invested Capital 4.09B 4.44B 4.32B 4.17B 4.57B
Cash ROIC 7.90% 6.21% 6.02% 6.52% 5.04%

Excellent Return on Equity over the past 5 years

Over the past 5 years, AN has generated strong profits with money shareholders have invested. This is considered one of the best indicators of quality management. Beware of extremely high Return on Equity (> 50%) as this is often unsustainable.

AN has generated $18.84 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20132014201520162017
Net Income 374.90M 418.70M 442.60M 430.50M 434.60M
divided by
Stockholders' Equity 2.06B 2.07B 2.35B 2.31B 2.37B
Return on Equity 18.18% 20.21% 18.84% 18.63% 18.34%

Excellent Business Performance over the past 10 years

AN has been able to maintain profitability in good times and bad. This could mean AN has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

AN has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in December
2008200920102011201220132014201520162017
Free Cash Flow 568.00M 294.00M 90.00M 227.30M 156.00M 323.30M 275.90M 259.60M 271.50M 230.00M

Weak Balance Sheet

AN's financial position is not ideal. The key is to check whether AN is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in December
2008200920102011201220132014201520162017
Cash 111.00M 173.70M 95.10M 86.60M 69.70M 69.20M 75.40M 74.10M 64.80M 69.20M
Current Assets 2.55B 2.25B 2.63B 2.68B 3.36B 3.83B 4.00B 4.71B 4.71B 4.80B
Total Assets 6.01B 5.41B 5.97B 6.20B 7.20B 7.91B 8.40B 9.56B 10.06B 10.27B
Current Liabilities 2.46B 1.86B 2.40B 2.46B 3.20B 3.75B 3.88B 5.17B 5.83B 5.64B
Total Liabilities 3.82B 3.10B 3.90B 4.30B 5.51B 5.85B 6.33B 7.21B 7.75B 7.90B
Stockholder' Equity 2.20B 2.30B 2.08B 1.89B 1.69B 2.06B 2.07B 2.35B 2.31B 2.37B
Current Ratio 1.04 1.21 1.10 1.09 1.05 1.02 1.03 0.91 0.81 0.85
TL-to-TA 0.63 0.57 0.65 0.69 0.77 0.74 0.75 0.75 0.77 0.77

Low or No Reinvestment of Profits over the past 10 years

AN has either been retaining a small amount of their earnings or has done so inconsistently. A lack of consistency could be due to AN operating at a loss or them having such a strong economic moat they feel comfortable spending profits on growth. Be wary of future prospects and if applicable, inspect the moat's sustainability.
Figures in USD. Fiscal year ends in December
2008200920102011201220132014201520162017
Retained Earnings 2.02B 2.22B 2.37B 2.65B 2.96B 3.34B 3.76B 2.70B 3.13B 2.83B
Retained Earnings Growth - 9.79% 6.49% 11.90% 11.95% 12.65% 12.54% -28.05% 15.93% -9.61%

Highly Competitive Industry over the past 10 years

It's likely that AN is in an industry with low barriers to entry, spurring high competition. If Gross Margins are at least satisfactory, it's likely AN invests heavily in R&D and Sales, General & Administrative expenses.

Only $0.94 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2008200920102011201220132014201520162017
Net Income -1.24B 198.00M 226.60M 281.40M 316.40M 374.90M 418.70M 442.60M 430.50M 434.60M
divided by
Revenue 14.13B 10.76B 12.46B 13.83B 15.67B 17.52B 19.11B 20.86B 21.61B 21.53B
Net Profit Margin -8.80% 1.84% 1.82% 2.03% 2.02% 2.14% 2.19% 2.12% 1.99% 2.02%

Weak Pricing Power over the past 10 years

AN is likely in a highly competitive industry, due to low barriers to entry. It's because of this, that AN has been unable to raise prices and increase their profitability. This puts them in a poor position if inflation becomes an issue, as they would struggle to pass higher costs onto consumers.

Only $16.23 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2008200920102011201220132014201520162017
Gross Profit 2.38B 1.93B 2.13B 2.30B 2.49B 2.76B 2.99B 3.26B 3.31B 3.36B
divided by
Revenue 14.13B 10.76B 12.46B 13.83B 15.67B 17.52B 19.11B 20.86B 21.61B 21.53B
Gross Margin 16.84% 17.93% 17.07% 16.66% 15.87% 15.76% 15.64% 15.63% 15.33% 15.60%

High Capital Intensity over the past 10 years

AN spends large amounts of capital buying new equipment or investing in new facilities to stay competitive. Over the long term, those costs may have to be fuelled by debt. Look at the growth of Shareholders' Equity to see if this strategy is having a positive or negative impact.

54.47% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in December
2008200920102011201220132014201520162017
Capital Expenditure 117.40M 75.50M 161.80M 149.10M 160.60M 160.80M 209.20M 247.60M 244.50M 310.10M
divided by
Net Income -1.24B 198.00M 226.60M 281.40M 316.40M 374.90M 418.70M 442.60M 430.50M 434.60M
Capital Expenditure Ratio -9.44% 38.13% 71.40% 52.99% 50.76% 42.89% 49.96% 55.94% 56.79% 71.35%

No Dividend History over the past 10 years

AN has never distributed dividends or has recently suspended their dividend distribution.
Figures in USD. Fiscal year ends in December
2008200920102011201220132014201520162017
Dividend Paid - - - - - - - - - -
divided by
Shares Outstanding 177.80M 177.30M 158.60M 147.30M 125.80M 123.30M 118.90M 113.90M 103.80M 98.20M
Dividend Paid Per Share - - - - - - - - - -
Price at Year End 9.45 19.25 28.46 36.87 38.92 49.84 60.80 60.28 48.65 39.36
Dividend Yield - - - - - - - - - -

Strong History of Stock Buybacks over the past 10 years

AN has a strong history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in December
2008200920102011201220132014201520162017
Shares Outstanding 177.80M 177.30M 158.60M 147.30M 125.80M 123.30M 118.90M 113.90M 103.80M 98.20M
Stock Bought Back - 0.28% 11.79% 7.67% 17.09% 2.03% 3.70% 4.39% 9.73% 5.70%
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