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Can AutoNation (AN) Maintain Its Earnings Beat Streak in Q2?

AutoNation, Inc. AN is slated to release second-quarter 2021 results on Jul 19, before the opening bell. The Zacks Consensus Estimate for the quarter’s earnings and revenues is pegged at $2.65 per share and $5.94 billion, respectively.

AutoNation, the largest automotive retailer in the United States, delivered better-than-expected results in the last reported quarter on higher-than-anticipated revenues from new and used vehicles. Operational efficiency also aided the bottom line. 

In the preceding four quarters, the company surpassed the Zacks Consensus Estimate on all occasions, with the average being 103.6%. This is depicted in the graph below:

AutoNation, Inc. Price and EPS Surprise

AutoNation, Inc. price-eps-surprise | AutoNation, Inc. Quote

Trend in Estimate Revisions

The Zacks Consensus Estimate for AutoNation’s second-quarter earnings per share has been revised upward by 12 cents over the past seven days. The bottom-line projection indicates an improvement from the year-ago earnings of $1.41 per share. Moreover, the Zacks Consensus Estimate for quarterly revenues suggests a year-over-year rise of 31%.

Earnings Whispers

Our proven model predicts an earnings beat for AutoNation this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Earnings ESP: The company has an Earnings ESP of 33.44%. This is because the Most Accurate Estimate is pegged 89 cents above than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: AutoNation currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors to Note

Demand for vehicles in second-quarter 2021 had been strong amid preference for personal mobility, widespread vaccination drive, unprecedented federal aid and the gradual reopening of activities. This is likely to have driven AutoNation’s sales in the quarter to be reported. AutoNation’s heightened focus on providing enhanced digital solutions is anticipated to have fueled sales during the quarter in discussion. Increasing prices of used vehicles are also expected to have driven revenues.

The consensus mark for revenues of new and used vehicles is pegged at $3,171 million and $1,723 million, indicating an increase from the year-ago level of $2,261 million and $1,325 million, respectively. Additionally, the consensus estimate for revenues from Finance & Insurance and Parts & Services segments is pegged at $309 million and $872 million, indicating 25.6% and 26.4% growth, respectively.

Sharpened focus on cost discipline is anticipated to have aided margins. All in all, robust sales across all segments and operational discipline are set to drive AutoNation’s second-quarter 2021 results.

Other Stocks With Favorable Combinations

Here are a few other auto stocks having the right combination of elements to come up with an earnings beat this time around:

Tesla TSLA has an Earnings ESP of +5.85% and flaunts a Zacks Rank #2 at present. The company is set to announce second-quarter 2021 results on Jul 26.

PACCAR PCAR has an Earnings ESP of +1.81% and holds a Zacks Rank #3 at present. The company is scheduled to announce fourth-quarter 2020 results on Jul 27.

Cummins CMI has an Earnings ESP of +2.51% and carries a Zacks Rank #3 at present. The company is slated to announce second-quarter 2021 results on Aug 3.

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