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AutoNation Shares Rise on Stronger-Than-Expected Results

AutoNation's third-quarter net income doubled. The stock is higher.

AutoNation  (AN) - Get AutoNation, Inc. Report shares rose on Thursday after the auto-retailing major reported stronger-than-expected results for the third quarter.

Net income surged to $361.7 million, or $5.12 a share, from $182.6 million, or $2.05 a share, in the year-earlier quarter. The FactSet analyst consensus called for $2.40 a share of profit in the latest quarter.

Revenue jumped 18% to $6.38 billion from $5.41 billion a year earlier for the Fort Lauderdale, Fla., company. Analysts had anticipated $6.29 billion for the latest quarter.

The stock recently traded at $125.34, up 7.2%. It has soared 79% year to date amid strong appetite for autos.

"Consumer demand continued to outpace supply, driven by consumer desire for personal transportation and ongoing manufacturing supply chain disruptions," the company said.

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"New vehicle inventory remains at historically low levels."

"Demand continues to outpace supply for new vehicles," Chief Executive Mike Jackson said in a statement. 

"New-vehicle sales are constrained by reduced production volume with low inventory levels. We expect this pent-up demand to support sales for the foreseeable future."

Prior to the earnings report, Morningstar analyst David Whiston put fair value at $98 for AutoNation stock.

AutoNation's "massive size and economy of scale advantages will allow the company to deliver operating margins at times above 4%, and we see upside potential to profits as its AutoNation USA stand-alone used-vehicle stores roll out,” he wrote last month.

“There are eight USA stores, and in April 2021 the firm announced plans to have over 130 by the end of 2026, with some in new U.S. markets.”