Core Viewpoint - AutoNation is experiencing strong financial performance, leading to an optimistic price target increase by Wells Fargo analyst Colin Langan from $222 to $230, indicating a potential upside of 6.16% from the current trading price of $216.65 [1][2][5] Financial Performance - For the full year, AutoNation's revenue increased by 3% to $27.6 billion, while adjusted earnings per share (EPS) rose by 16% to $20.22 [3][5] - The company generated over $1 billion in adjusted free cash flow despite a challenging sales environment, showcasing its financial resilience [2][5] - In the fourth quarter, adjusted EPS was $5.08, reflecting a 2% increase year-over-year, although adjusted net income slightly decreased to $186 million from $199 million the previous year [3] Stock Performance - AutoNation's stock is currently priced at $216.65, reflecting an increase of 6.19% or $12.63, with fluctuations between a low of $203.10 and a high of $223.41 on the trading day [4] - Over the past year, the stock has reached a high of $228.92 and a low of $148.33, with a market capitalization of approximately $7.9 billion [4]

AutoNation said fourth-quarter comparisons were difficult, citing a post-election sales surge in Q4 2024 that drove a light vehicle SAAR of 16.7 million. Manley also pointed to demand being pulled forward earlier in the year as consumers reacted to tariff announcements and purchased vehicles before the expiration of government incentives tied to electric-related powertrains.He noted that adjusted earnings exclude business interruption insurance recoveries related to the second quarter 2024 CDK incident, tot ...

Core Insights - AutoNation, Inc. reported fourth-quarter adjusted earnings that surpassed analyst expectations despite a revenue decline, demonstrating the resilience of its diversified operating model [1] - Shares increased by over 9% intra-day following the earnings report [1] Financial Performance - Adjusted earnings per share were $5.08, exceeding the consensus estimate of $4.91 [1] - Revenue for the quarter was $6.9 billion, which was below the expected $7.22 billion and represented a 4% decline from the same period last year [1] Sales Performance - Same-store retail new vehicle unit sales decreased by 10.2% year over year, attributed to tough comparisons from the previous year and elevated sales earlier in 2025 due to tariffs and the expiration of government electric-vehicle incentives [2] After-Sales Business - The company achieved record fourth-quarter gross profit in its After-Sales business, supported by 4% same-store growth [3] - Record quarterly Customer Financial Services profit per unit was reported, highlighting the strength of its diversified revenue streams [3] Expansion and Acquisitions - AutoNation Finance expanded its portfolio to $2.2 billion while improving profitability and funding [4] - The company completed strategic acquisitions in Baltimore, Chicago, and Denver, enhancing its brand mix and geographic footprint [4]

U.S. Stock Market - U.S. stocks traded higher, with the S&P 500 gaining around 1.6% on Friday [1] - The Dow increased by 2.01% to 49,891.59, while the NASDAQ climbed 1.84% to 22,954.50 [1] - Information technology shares rose by 2.5%, while communication services stocks fell by 2% [1] AutoNation, Inc. - Shares of AutoNation, Inc. jumped more than 7% after posting fourth-quarter results [2] - The company reported adjusted earnings per share of $5.08, a 2% increase year over year, beating the analyst consensus estimate of $4.85 [2] - Sales of $6.929 billion missed the consensus estimate of $7.200 billion [2] Commodity Market - Oil traded up 0.5% to $63.60, while gold increased by 1.6% to $4,969.00 [3] - Silver traded down 0.8% to $76.140, and copper rose 0.7% to $5.8590 [3] European Markets - European shares were higher, with the eurozone's STOXX 600 gaining 0.65% [4] - Spain's IBEX 35 Index rose 1.02%, London's FTSE 100 increased by 0.42%, Germany's DAX gained 0.56%, and France's CAC 40 rose 0.31% [4] Asian Markets - Asian markets closed mostly lower, with Japan's Nikkei falling 0.88% and China's Shanghai Composite declining 0.64% [5] - Hong Kong's Hang Seng Index gained 0.14%, while India's BSE Sensex fell 0.60% [5] Economic Indicators - The U.S. Manheim Used Vehicle Value Index rose 2.4% month-over-month in January [6] - The University of Michigan's consumer sentiment index increased by 0.9 points to 57.3 in February, surpassing market estimates of 55 [6]

Core Insights - Asbury Automotive (ABG) reported Q4 2025 adjusted earnings per share of $6.67, missing the Zacks Consensus Estimate of $6.70 and down from $7.26 in the previous year, primarily due to lower gross profits from new vehicle sales and retail wholesale [1][10] - Total revenues reached $4.7 billion, a nearly 4% year-over-year increase, but fell short of the Zacks Consensus Estimate of $4.82 billion [1] Segment Details - New vehicle revenues increased by 3% year over year to $2.53 billion, missing the Zacks Consensus Estimate of $2.59 billion; retail units sold totaled 47,201, exceeding the consensus of 47,182 units; however, gross profit declined by 8% to $157.9 million, missing the estimate of $160 million [2] - Used vehicle retail revenues rose by 1% to $1.11 billion but missed the Zacks Consensus Estimate of $1.18 billion due to a decrease in units sold, totaling 33,782, which was down 4% year over year and below the consensus of 37,128 [3] - Retail used vehicle average selling price (ASP) increased by 6% to $32,993, surpassing the estimate of $31,558; gross profit from this segment was $59.4 million, up 16% year over year but below the estimate of $61 million [4] - Revenues from the used vehicle wholesale business grew by 11% to $177 million, beating the consensus of $173 million; however, gross profit fell by 50% to $0.9 million, missing the estimate of $3.42 million [4] - Finance and insurance business net revenues amounted to $201.4 million, up 1% year over year and exceeding the estimate of $186 million; gross profit was $189 million, up 2% year over year and beating the estimate of $177 million [5] - Parts and service business revenues reached $658.3 million, up from $590.4 million year over year but missing the estimate of $667 million; gross profit rose by 13% to $385.9 million, falling short of the consensus of $391 million [6] Other Financial Insights - Selling, general & administrative expenses as a percentage of gross profit increased to 66.7%, up 307 basis points year over year [7] - As of December 31, 2025, the company had cash and cash equivalents of $40.4 million, down from $69.4 million a year earlier; long-term debt rose to $3.57 billion from $3.14 billion [7] - The company repurchased approximately 212,000 shares for $50 million in Q4 2025, totaling about 433,000 shares for $100 million for the full year; $176 million remains available under its share buyback authorization [8]

Financial Data and Key Metrics Changes - AutoNation reported a solid fourth quarter with a 3% revenue growth and an 8% adjusted net income growth, leading to a 16% increase in adjusted earnings per share [3][4] - Adjusted free cash flow exceeded $1 billion, up approximately 39% from 2025, with a capital deployment of over $1.5 billion, half of which was allocated to share repurchases [3][10] - The balance sheet remained healthy, with year-end leverage largely unchanged from the prior year at 2.44x EBITDA [4][30] Business Line Data and Key Metrics Changes - Same-store unit sales of new vehicles decreased by 10% in Q4, with a significant decline of 60% in battery electric vehicles and 10% in hybrid powertrain vehicles [5][18] - Used vehicle gross profit increased by 5% for the full year, despite a 6% decline in profit per unit for Q4 [7][20] - Customer Financial Services (CFS) unit profitability grew by 8% year-over-year, with record gross profit per unit achieved [8][21] Market Data and Key Metrics Changes - The industry faced tougher sales comparisons in Q4 2025, with a light vehicle SAR of 16.7 million in Q4 2024, impacting sales negatively [4][18] - New vehicle inventory amounted to 45 days of supply, up from 39 days in Q4 2024 [19] - The used vehicle market remains tight, with a focus on acquiring vehicles through internal channels [21] Company Strategy and Development Direction - AutoNation expanded its presence in key markets through acquisitions, including a Ford and Mazda store in Denver and an Audi and Mercedes store in Chicago [11][29] - The company aims to maintain a balanced capital allocation strategy, focusing on both M&A opportunities and share repurchases [30][56] - The strategy includes improving after-sales growth and maintaining strong cash flow to support future investments [34][27] Management's Comments on Operating Environment and Future Outlook - Management expects the market to be slightly down in 2026 compared to 2025, with potential benefits from tax changes and improved used vehicle market conditions [32][34] - There is a focus on maintaining performance in the CFS business while being aware of consumer sensitivity to monthly payments [33][78] - Management is optimistic about the growth trajectory in after-sales and the potential for continued profitability in the AN Finance portfolio [33][43] Other Important Information - Adjusted EPS for Q4 was $5.08, a 2% increase from the previous year, while full-year adjusted EPS was $20.22, up 16% from 2024 [18][10] - The company repurchased $785 million worth of shares, reducing share count by 10% year-over-year [29][30] Q&A Session Summary Question: Regarding the new car business and unit numbers - Management noted a reduction in OEM dealer-facing incentives and a significant drop in EV volume, which contributed to the decline in same-store sales [38][40] Question: On AutoNation Finance's profitability cadence - Management expressed confidence in continued profitability growth, with a starting point of $6 million in Q4 and expectations for improvement throughout 2026 [41][42] Question: Capital spending and M&A market outlook - Management indicated that 2026 capital spending levels would be similar to 2025, with ongoing opportunities in the M&A market [52][54] Question: Trends in hybrid and electric vehicle GPUs - Management observed a decline in hybrid GPUs and flat performance for battery electric vehicles, with expectations for improvement in hybrid margins in 2026 [60][62] Question: Consumer credit availability and affordability pressures - Management acknowledged significant growth in monthly payments and anticipated some relief in charged APR, while emphasizing the importance of affordability in the new car market [77][78]

Financial Data and Key Metrics Changes - The company reported a 3% revenue growth and an 8% adjusted net income growth for the fourth quarter and full year, with adjusted earnings per share (EPS) increasing by 16% [3][12] - Adjusted free cash flow exceeded $1 billion, up approximately 39% from 2024, with a 10% reduction in shares outstanding due to share repurchases [3][10] - The fourth quarter adjusted net income was $186 million, compared to $199 million a year ago, while full-year adjusted net income increased 8% to $757 million [17][18] Business Line Data and Key Metrics Changes - Same-store unit sales of new vehicles decreased by 10% in the fourth quarter, with a significant decline of 60% in battery electric vehicles (BEVs) [5][18] - Used vehicle gross profit increased by 5% for the full year, despite a 6% decline in profit per unit for the fourth quarter [7][20] - Customer Financial Services (CFS) unit profitability grew by 8% year-over-year, with total gross profit for CFS reaching record levels [8][9] Market Data and Key Metrics Changes - The fourth quarter faced tougher sales comparisons due to a surge in sales in Q4 2024, leading to a light vehicle SAAR of 16.7 million [4] - The company expanded its presence in key markets, acquiring several dealerships in Denver, Chicago, and Baltimore [11] - The used vehicle market remains tight, with the company sourcing over 90% of its vehicles through internal channels [21] Company Strategy and Development Direction - The company plans to continue focusing on capital allocation, with a balanced approach between reinvestment in the business and shareholder returns [29][30] - There is an emphasis on maintaining profitability in the CFS business while expanding the AN Finance portfolio [33] - The company aims to optimize vehicle acquisition and improve customer experience in the used vehicle market [20][84] Management's Comments on Operating Environment and Future Outlook - Management expects the market to be slightly down in 2026 compared to 2025, with potential benefits from tax rates and bonus depreciation [32] - The company anticipates stability in new unit profitability and improvements in the used vehicle market year-over-year [32][33] - Affordability pressures are a key concern, with management noting the importance of customer sensitivity to monthly payments [78][79] Other Important Information - The company deployed over $1.5 billion in capital, with half reinvested in the business and half returned to shareholders through share repurchases [29][30] - The balance sheet remains healthy, with leverage largely unchanged from the prior year at 2.44x EBITDA [30] Q&A Session Summary Question: Regarding the new car business and unit numbers - Management noted a reduction in OEM dealer incentives and a significant drop in EV volume as key factors affecting sales performance [39][40] Question: On AutoNation Finance's profitability trajectory - Management expressed confidence in continued profitability growth, with a strong starting point for 2026 [42][43] Question: Capital spending and M&A market outlook - Management indicated that 2026 capital spending levels would be similar to 2025, with ongoing opportunities in the M&A market [52][55] Question: Trends in hybrid and electric vehicle gross profit margins - Management highlighted a significant pullback in OEM incentives and expected stabilization of margins for hybrids, while improvements for BEVs may take longer [60][61] Question: Consumer credit availability and affordability pressures - Management acknowledged rising monthly payments and anticipated some relief in charged APR, emphasizing the need for competitive pricing in after-sales [78][79]

Financial Data and Key Metrics Changes - AutoNation reported a solid fourth quarter with a 3% revenue growth and an 8% adjusted net income growth, leading to a 16% increase in adjusted earnings per share [3][11] - Adjusted free cash flow exceeded $1 billion, up approximately 39% from 2024 [3][9] - Adjusted net income for the full year increased by 8% to $757 million, while adjusted EPS was $20.22, a 16% increase from 2024 [16][17] Business Line Data and Key Metrics Changes - Same-store unit sales of new vehicles decreased by 10% in Q4, with a 60% decline in battery electric vehicles and a 10% decline in hybrid powertrain vehicles [5][17] - Used vehicle gross profit increased by 5% for the full year, with retail profitability per unit in line with 2024 [6][19] - Customer Financial Services (CFS) unit profitability grew by 8% year-over-year, with record gross profit per unit [7][21] Market Data and Key Metrics Changes - The fourth quarter faced tougher sales comparisons due to a surge in sales in Q4 2024, resulting in a light vehicle SAR of 16.7 million [4] - New vehicle inventory amounted to 45 days of supply, up 6 days from the previous year [18] - The used vehicle market remains tight, with a focus on acquiring vehicles through internal channels [20] Company Strategy and Development Direction - AutoNation expanded its presence in key markets by acquiring several dealerships, including Ford and Mazda in Denver and Audi and Mercedes in Chicago [10][29] - The company aims to maintain a balanced capital allocation strategy, with significant investments in both CapEx and share repurchases [29][30] - The focus remains on improving after-sales performance and customer retention through enhanced service offerings [8][79] Management's Comments on Operating Environment and Future Outlook - Management expects the market to be slightly down in 2026 compared to 2025, with potential benefits from tax changes and depreciation [32] - The used vehicle market is anticipated to show year-over-year improvements, while new unit profitability is expected to remain stable [32][33] - Affordability pressures are a key concern, with expectations of OEMs providing more affordable models to address consumer sensitivity to monthly payments [77][78] Other Important Information - The company deployed over $1.5 billion in capital, with half reinvested in the business and half returned to shareholders through share repurchases [29][30] - The balance sheet remains healthy, with leverage largely unchanged from the prior year at 2.44x EBITDA [30] Q&A Session Summary Question: Regarding the new car business and weaker unit numbers - Management noted a reduction in OEM dealer-facing incentives and a significant drop in EV volume, which contributed to the decline in unit sales [38][40] Question: On AutoNation Finance's profitability cadence - Management expressed confidence in continued profitability growth, with a strong starting point for 2026 [42][43] Question: Capital spending and M&A market outlook - Management indicated that 2026 capital spending levels would be similar to 2025, with ongoing opportunities in the M&A market [52][54] Question: Impact of lease returns on dealership business - Management believes OEMs have prepared for increased lease returns and expects this to benefit the dealership business [71][73] Question: Consumer credit availability and after-sales behavior - Management acknowledged affordability pressures and noted that consumer behavior in after-sales has become more price-sensitive [77][79] Question: Used market strategy and mix shifts - Management highlighted strong performance in higher-priced used vehicles and the need to balance inventory across price segments [82][83]

Group 1 - CarMax Inc. is recognized as one of the best used-car stocks to buy, according to hedge funds, as it aims to repair its business through increased advertising spending [1] - The company is facing a significant sales slump that has resulted in a nearly 50% reduction in its market value [1] - Interim CEO David McCreight expressed optimism about immediate pricing and marketing actions to improve sales performance, although these actions may pressure earnings in the near term [2] Group 2 - CarMax is targeting $150 million in cost cuts, primarily focusing on general and administrative expenses, which will include layoffs affecting nearly a third of its workforce [2] - Truist Securities raised its price target for CarMax to $37 from $35, maintaining a Hold rating, in response to third-quarter results that met estimates [3] - The company operates as the largest U.S. used vehicle retailer with over 250 locations and a "no-haggle" pricing model, specializing in certified used cars, financing, and direct consumer purchases [4]

Fourth Quarter 2025 Earnings Release February 6, 2026 1 Forward-Looking Statements This news release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Words such as "anticipates," "expects," "estimates," "intends," "goals," "targets," "projects," "plans," "believes," ...