AutoNation Beats Expectations; Profit Up 15%
AutoNation Inc (NYSE:AN) on Tuesday reported a 15 percent jump in third-quarter earnings, in part because of robust profit from used cars.
Shares of the largest U.S. auto dealer group rose 3.5 percent to $53.83 in trading before the market opened.
Chief Executive Officer Mike Jackson said the U.S. recovery from the recession five years ago would continue into 2015. He expects U.S. new auto sales to top 17 million vehicles for the first time since 2001.
Industry consultants LMC Automotive on Monday said 2014 U.S. new auto sales would be 16.4 million.
"The auto recovery has continued to build momentum," Jackson said in a statement. "The auto credit environment remains strong," and new vehicle models are compelling and more fuel-efficient.
The Fort Lauderdale, Florida-based company earned 90 cents per share, beating Wall Street expectations of 86 cents, according to Thomson Reuters I/B/E/S.
Revenue of $4.91 billion exceeded estimates of $4.80 billion.
During the quarter, AutoNation repurchased 4.4 million shares of common stock for $235.9 million. So far this year, it has bought back 8 percent of its outstanding shares.
Net income rose 15 percent to $106.5 million, or 90 cents per share, from $92.6 million, or 75 cents per share, a year earlier.
Same-store used car retail gross profit rose 12.8 percent to $90.6 million, offsetting a 0.3 percent drop in new vehicle gross profit to $154.7 million.
The number of new vehicles sold in the quarter rose 8.8 percent, while the number of used vehicles sold increased 7.5 percent, for an aggregate rise of 8.2 percent to 140,266.
Per vehicle, gross profit on retail sales of new cars fell 7.1 percent to $1,877, but rose 6.2 percent to $1,622 for used cars and increased 3.8 percent to $1,401 for finance and insurance.
"We believe volume and improved front end gross opportunities will exist in our used vehicle business due to an increasing supply of used cars and lower acquisition costs," Jackson said in a statement.
(Reporting by Bernie Woodall Editing by W Simon and Lisa Von Ahn)