Make better investment decisions with Simply Wall St's easy, visual tools that give you a competitive edge.
AutoNation (AN) has drawn investor attention after recent share price moves, with the stock last closing at US$229.98. The company operates across Domestic, Import, Premium Luxury and finance segments in the US automotive retail market.
See our latest analysis for AutoNation.
Recent trading has been strong for AutoNation, with a 1 month share price return of 21.75% and a 7 day share price return of 11.66%. The 1 year total shareholder return of 19.61% sits alongside a 5 year total shareholder return of 97.71%, pointing to momentum that has been sustained over multiple years.
If AutoNation's recent move has you looking at where else capital is flowing in the market, this could be a good moment to check out 18 top founder-led companies
Bulls point to AutoNation's strong recent returns and ongoing profitability, while bears question how much of that strength is already in the price. Does the current valuation still look reasonable once the numbers are unpacked?
The most followed narrative puts AutoNation's fair value at $242.75, a little above the last close of $229.98, which suggests a modest valuation gap that hinges on how reliable its long term earnings power proves to be.
AutoNation's robust growth in After-Sales (service, parts, and collision), which delivered record revenue and expanding gross margins, positions the company to benefit from the long-term increase in vehicle age and a growing car parc in the U.S. This secular shift is likely to underpin resilient, recurring high-margin revenue and support future earnings stability and growth.
Want to see what sits behind that fair value for AutoNation? The narrative leans on measured revenue growth, steady margins and a future earnings multiple that stays below many peers. Curious how those pieces fit together into the $242.75 figure and what kind of earnings profile that implies over time?
Result: Fair Value of $242.75 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, the AutoNation narrative still faces real tests, including pressure from direct-to-consumer and online auto retail, as well as possible margin strain as EV adoption expands.
Find out about the key risks to this AutoNation narrative.
The fair value narrative for AutoNation leans on earnings and multiples, yet the Simply Wall St DCF model points in a different direction. On this approach, AutoNation at $229.98 sits above an estimate of future cash flow value of $213.07, which frames the stock as overvalued rather than 5.3% undervalued. Which lens do you trust more for your own work?
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out AutoNation for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 48 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
With mixed signals on AutoNation so far, it makes sense to move quickly, review both the potential risks and rewards, and then decide what feels reasonable for your own portfolio using the 4 key rewards and 2 important warning signs.
If AutoNation has your attention, do not stop there. Use this moment to broaden your watchlist and uncover other opportunities that could suit your goals.
Target reliable income potential by reviewing companies in the 9 dividend fortresses that focus on returning cash to shareholders.
Spot potential value opportunities early by scanning the screener containing 21 high quality undiscovered gems before they appear on most investors' radars.
Strengthen your downside protection by checking companies in the 85 resilient stocks with low risk scores that score well on resilience.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include AN.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]