Financial Trading Blog
Stock of the day 05/01/2015 – AutoNation Inc
Its 2014 got off to a middling start, opening the year at $49.54 after a gradual growth throughout much of 2013. This growth continued until mid-July, where share prices reached $61.27, at that point a record-breaking price for AutoNation. However, significant falls in late July and mid-October saw these gains wiped out, and a year low price of $46.20. Yet in a show of resilience, the stock managed to recreate these gains, even creeping to a new record high of $61.39 at the very end of December. This meant the stock could enter 2015 at $60.64, a vast improvement on its 2014 beginning.
AutoNation has been aggressively expanding over the past 10 quarters, leading to not only the acquirement of 18 new franchises, but has been bequeathed 6 brand new premium luxury franchises by manufacturers. However, AutoNation also acknowledged that it needed to not only expand its physical presence, but its online services too, announcing that it was putting extensive resources into creating an online sales-website.
The automotive industry is not immune to the usual challenges for brick and mortar retail stores, yet has been slow to play catch-up online due to a reluctance to post prices online. Yet with manufacturers like General Motors utilising online-sales platforms, AutoNation has realised the need for such a service.
The company’s earnings have also been strong recently, with a 20% gain in earnings per share to $0.90 in Q3 2014, alongside a 9.2% rise in year on year new vehicle unit sales. November sales also grew 6% between 2013 and 2014, and AutoNation expect to sell more than 17 million units in 2015. With Zachs giving the company a ‘buy’ rating in December, AutoNation are in a good position at the start of this New Year.
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