AutoNation's Buybacks Have Been A Game-Changer
Summary
- While AutoNation, Inc. shares are down, other car dealers have performed worse, but I expect the company to report differentiated results next week.
- AutoNation's diversified revenue streams insulate it from normalization in used car prices.
- Having bought back 1/4 of the company and with share repurchases ongoing, EPS will be held relatively well, even as results normalize.
- With my base-case 2023 EPS of $12, AutoNation shares are just 8.5x earnings, making the stock a buy.
Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in AN over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.