AutoNation Sales Soar - Analyst Blog

AutoNation (AN) retailed 17,041 new vehicles in February 2011, up 29% and 14% from February 2010 and January 2011, respectively.

Under the Domestic segment, retail new vehicle sales rose 40% year over year and 11% sequentially to 5,240 units, whereas under the Import segment, retail new vehicle sales grew 35% year over year and 23% sequentially to 9,114 units. However, retail new vehicle sales under the Premium Luxury segment decreased 1% year over year and 3% sequentially to 2,687 units.

The company’s Domestic and Import segments showed improvements in sales due to a global boom in truck sales. However, the Premium Luxury segment was affected by the overall economic condition, unemployment risks and uncertainty among consumers.

Last year, the company earned a net income of $247 millionor $1.56per share compared with $204 millionor $1.15per share in 2009. The 21% growth in net income was attributable to strong new vehicle sales. Retail new vehicle unit sales climbed 13% to 206,456 in 2010 from 182,160 in the last year. Revenues increased by 17% to $12.5 billion.

AutoNation expects to record heightened sales based on its industry new vehicle sales guidance of 12.8 million units for 2011. Consequently, the company is focusing on expanding its dealership and simultaneously seeking internal growth for tapping this opportunity.

The company’s new acquisitions, including the Ft. Myers Toyotain Florida, are a crucial step to capitalize on the growing demand. Ft. Myers, one of the largest Toyota stores in the U.S., generates annual revenues of $135 million.

AutoNation, a Zacks #3 Rank (Hold) stock, is the largest automotive retailer in the U.S. and is about twice the size of its arch rival. It sells 33 different brands of new vehicles, the core brands being Ford Motor Co. (F), General Motors Company (GM), Chrysler, Toyota Motor Corp. (TM), Nissan Motor Co. Ltd. (NSANY), Honda Motor Co. Ltd. (HMC), Mercedes, Lexus, Land Rover, Porsche and BMW. These core brands constitute more than 90% of the company sales. For the long term, we maintain a Neutral recommendation on the shares.