AutoNation Enhances Share Buyback - Analyst Blog

AutoNation Inc. (AN) announced that its board of directors has authorized the repurchase of up to an additional $250 million of common stock under its existing share buyback program. This has increased the total authorized amount under the program to $395.9 million.

Last year, the automotive retailer had increased the authorization amount during May and July by $250 million each. In the first quarter of 2011, the company repurchased 1.8 million shares at an aggregate price of $58.8 million, reflecting an average price of $32.60.

During the quarter, AutoNation reported a rise in profit to $70.3 million or 46 cents per share from $58.8 million or 34 cents in the year-ago period driven by strong new and used vehicle sales. The profit exceeded the Zacks Consensus Estimate by 3 cents per share.

Total revenues amounted to $3.31 billion, up 16.5% from $2.84 billion, surpassing the Zacks Consensus Estimate of $3.23 billion. Operating income improved to $140.0 million from $115.1 million a year ago.

New vehicles added $1.79 billion to total revenues, up 22.6% from last year’s $1.46 billion. The retailer’s new vehicle sales rose 22.8% to 55,710 units, translating into revenues of $32,043 per vehicle, a marginal decrease from last year’s $32,209. However, the company expects new vehicle sales of 12 million units for full year 2011, given the supply constraints stemming from Japan.

Used vehicles added $831.4 million to total revenues, an increase of 13.6% from $731.6 million in the same period last year. Used vehicles sold increased 11.8% to 42,089 units, generating per vehicle revenues of $17,282, a slight increase from last year’s $17,085.

A few days back, AutoNation reported that its retail new-vehicle sales in April rose 11% to 18,266 units. The company’s Domestic sales went up 18% to 5,796 units, Import sales increased 4% to 9,123 units and Premium Luxury sales rose 19% to 3,347 units.

AutoNation, a Zacks #3 Rank (Hold) stock, is the largest automotive retailer in the U.S. and is about twice the size of its nearest competitor. It sells 33 different brands of new vehicles, the core brands being Ford (F), General Motors (GM), Chrysler, Toyota (TM), Nissan (NSANY), Honda (HMC) and BMW. These core brands represent more than 90% of the company sales.