AN changes
Pick any two versions below to diff them.
- Price
- $159.80 → $153.01(−4.2%)
- Discount
- 21% to 42% → 24% to 44%(+3.0 pts)
- Next earnings is estimate
- Yes → No
- Thesis
- The market prices AutoNation as a dealer whose profits passed their peak. Vehicle profits fall while unit sales fall, and earnings per share grow mainly because the company buys back shares. In Q2 2026, same-store new vehicle unit sales fell 5% and used unit sales fell 8% from a year earlier. New vehicle gross profit fell 18%, and adjusted operating income fell 7%. Adjusted EPS still rose 2%, because the diluted share count was 12% lower. AutoNation also grows its own loan book, which adds credit risk. For the gap to close, four things must be true. Same-store unit sales must stop falling. After-Sales gross profit must keep growing, as it did with record results in Q2 2026 and 7% customer pay growth. AutoNation Finance must keep growing its profit while credit losses stay stable. The covenant leverage ratio must stay near 2.8 times or lower while buybacks continue. The first evidence comes with the Q3 2026 report, estimated for about on October 30, 2026, and then with the Q4 2026 report in early 2027. The gap depends on the vehicle cycle and on interest rates, so it can close only slowly, over the next two to three years. The main reason it may not close is a longer fall in vehicle demand and dealer margins.
- Checkpoints
- Oct 30, 2026 (estimate): Q3 2026 earnings: unit sales and vehicle margins. Pending. Watch: A smaller fall in same-store new and used unit sales than in Q2 2026 and growth in After-Sales gross profit pass; a larger fall in units or in adjusted operating income fails. Feb 15, 2027 (estimate): Q4 2026 earnings: AutoNation Finance and leverage. Pending. Watch: AutoNation Finance profit that keeps growing with stable credit losses, and covenant leverage at or below 2.8 times, pass; higher credit losses or rising leverage fails.
- Recent events
- 2026-10-16: AutoNation appointed Mark Stewart, the CEO of Goodyear and a former Chief Operating Officer of North America for Stellantis, to its board as an independent director. 2026-10-12: AutoNation said that it will report Q3 2026 results before the market opens on October 30, 2026, with a call at 9:00 a.m. ET. 2026-10-01: AutoNation appointed Ravi Simhambhatla, formerly Chief Digital and Innovation Officer of Avis Budget Group, as Chief Technology and AI Officer. He leads technology, data science and AI. 2026-09-14: AutoNation amended its unsecured credit agreement. The revolving credit facility rose to $2.0 billion from $1.9 billion, the accordion rose to $1.0 billion, and the maturity moved to September 14, 2031. The covenants stay at a maximum leverage ratio of 3.75 times and a minimum interest coverage ratio of 3.00 times. 2026-07-31: AutoNation reported Q2 2026 results. Revenue fell 1% to $6.9 billion. EPS was $5.39, and adjusted EPS was $5.56 against $5.46 a year earlier. Same-store new vehicle unit sales fell 5% and used unit sales fell 8%. After-Sales gross profit was a record, and the AutoNation Finance loan portfolio grew to $2.7 billion. In June, AutoNation bought a Toyota store near Atlanta and three Premium Luxury stores in the San Francisco Bay area, with about $600 million of annual revenue. 2026-05-05: Cascade Investment, controlled by Bill Gates, reported that it owns 7.06 million AutoNation shares, or 21.1% of the shares. The percentage rose because AutoNation's buybacks reduced the share count, not because Cascade bought shares. 2026-05-01: AutoNation reported Q1 2026 results. Revenue fell 2% to $6.6 billion. EPS was $5.85, and adjusted EPS was $4.69 against $4.68 a year earlier. AutoNation bought back shares for $300 million in the quarter, about 4% of the share count.