KeyBanc Starts AutoNation Inc. (AN) at Hold; Best-in-Breed, But Valuation Concerns
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Price: $209.41 +0.48%
Rating Summary:
17 Buy, 10 Hold, 4 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
17 Buy, 10 Hold, 4 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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KeyBanc initiates coverage on AutoNation Inc. (NYSE: AN) with a Hold.
KeyBanc analyst says, "We are initiating coverage of AN with a HOLD rating
as: 1) its business model is best of breed for the large publicly traded
automotive retailers; 2) catalysts exist for near and longer-term increases in
the U.S. light vehicle SAAR-in particular, a near-term inventory recovery from
the Japanese automakers (approximately 40% of sales) could serve as a catalyst for the stock; 3) while the Company is likely to continue to make
acquisitions, given its size and share count, the impact is likely to be less
incremental than for some of its smaller peers; 4) while there are some near-term gross profit margin headwinds across new, used and service, scale and business model improvements will likely drive incremental gross profit, leverage of SG&A and earnings improvement; 5) several large shareholders (ESL Investments - Eddie Lampert and Cascade Investment - Bill and Melinda Gates Foundation) appear to be directing a capital allocation strategy of using excess free cash flow to repurchase shares, effectively increasing their ownership percentage over time; and 6) while its best of breed model should enable an above average multiple, the capital allocation strategy appears to be driving its multiple materially above its peers'. We are introducing earnings estimates of $1.92 (First Call consensus $1.91) for 2011 and $2.13 (First Call consensus $2.12) for 2012."
For an analyst ratings summary and ratings history on AutoNation Inc. click here. For more ratings news on AutoNation Inc. click here.
Shares of AutoNation Inc. closed at $36.92 yesterday.
KeyBanc analyst says, "We are initiating coverage of AN with a HOLD rating
as: 1) its business model is best of breed for the large publicly traded
automotive retailers; 2) catalysts exist for near and longer-term increases in
the U.S. light vehicle SAAR-in particular, a near-term inventory recovery from
the Japanese automakers (approximately 40% of sales) could serve as a catalyst for the stock; 3) while the Company is likely to continue to make
acquisitions, given its size and share count, the impact is likely to be less
incremental than for some of its smaller peers; 4) while there are some near-term gross profit margin headwinds across new, used and service, scale and business model improvements will likely drive incremental gross profit, leverage of SG&A and earnings improvement; 5) several large shareholders (ESL Investments - Eddie Lampert and Cascade Investment - Bill and Melinda Gates Foundation) appear to be directing a capital allocation strategy of using excess free cash flow to repurchase shares, effectively increasing their ownership percentage over time; and 6) while its best of breed model should enable an above average multiple, the capital allocation strategy appears to be driving its multiple materially above its peers'. We are introducing earnings estimates of $1.92 (First Call consensus $1.91) for 2011 and $2.13 (First Call consensus $2.12) for 2012."
For an analyst ratings summary and ratings history on AutoNation Inc. click here. For more ratings news on AutoNation Inc. click here.
Shares of AutoNation Inc. closed at $36.92 yesterday.
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Edward Lampert, RBS Partners, ESL Investments, KeyBanc, Cascade Investment, Earnings, Bill & Melinda Gates Foundation TrustSign up for StreetInsider Free!
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