Why AutoNation (AN) Stock Is Gaining Today

NEW YORK (TheStreet) -- AutoNation (AN) shares are up 1.6% to $54.38 on Monday after reporting the best July sales numbers it has experienced in eight years.

The automotive retailer sold 27,484 new vehicles during the month, an 8% increase over the previous year.

Domestic and foreign vehicle sales rose 8% and 7%, respectively, while luxury car sales rose 17% over last July's totals.

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TheStreet Ratings team rates AUTONATION INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate AUTONATION INC (AN) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year, growth in earnings per share, increase in net income and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • AN's revenue growth has slightly outpaced the industry average of 0.5%. Since the same quarter one year prior, revenues slightly increased by 8.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • AUTONATION INC has improved earnings per share by 13.7% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, AUTONATION INC increased its bottom line by earning $3.05 versus $2.53 in the prior year. This year, the market expects an improvement in earnings ($3.33 versus $3.05).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Specialty Retail industry average. The net income increased by 11.7% when compared to the same quarter one year prior, going from $89.90 million to $100.40 million.
  • You can view the full analysis from the report here: AN Ratings Report
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