On Dec 29, 2015, Zacks Investment Research upgraded AutoNation, Inc. AN to a Zacks Rank #2 (Buy).
Why the Upgrade?
AutoNation recorded a year-over-year increase of nearly 7% in new vehicle sales to 89,953 units in the third quarter of 2015. On a same-store basis, retail new vehicle sales improved 5% year over year in the quarter. In the first nine months of 2015, new vehicle sales rose 7.6% year over year.
Meanwhile, AutoNation continues to expand its business through acquisitions. Earlier this month, the company signed an agreement to acquire Renton Honda in the Seattle-Bellevue market in Washington. AutoNation already operates 27 franchises in the state. The annual revenue from this store is expected to be $70 million. Also, in Oct 2015, the company announced that it inked an agreement to acquire 12 stores, including 31 franchises in the Houston, Dallas-Fort Worth, Corpus Christi, Tyler, Ennis and Waco, TX markets, from Allen Samuels Auto Group. These stores will generate additional revenue of $800 million and are expected to sell 19,500 new and used vehicles.
AutoNation also follows an aggressive share repurchase policy to boost shareholder value. During the first nine months of 2015, the company repurchased 3.5 million shares for $209.1 million. From Oct 1 through Oct 26, 2015, AutoNation repurchased 0.4 million shares for $24 million.
Stocks to Consider
Other well-ranked automobile stocks include General Motors Company GM, Fox Factory Holding Corp FOXF and O'Reilly Automotive Inc. ORLY. All these stocks carry a Zacks Rank #2.
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