Investment Thesis
AutoNation demonstrates solid operational profitability with 17.9% gross margins and strong 27.7% ROE, supported by 3.2% revenue growth. However, deteriorating profitability (-6.2% net income decline), severely negative free cash flow (-$197.5M), and high leverage (1.58x D/E ratio) indicate financial strain that offsets operational strengths.
AN Strengths
- Strong gross margins at 17.9% and ROE of 27.7% demonstrate efficient asset utilization and operational effectiveness
- Revenue growth of 3.2% YoY in challenging retail auto environment shows competitive positioning
- Adequate interest coverage of 6.9x indicates ability to service debt obligations
AN Risks
- Negative free cash flow of -$197.5M despite positive operating income signals cash generation problems and CapEx sustainability concerns
- Net income decline of 6.2% YoY contradicts revenue growth, indicating margin compression and operational headwinds
- High financial leverage (1.58x D/E ratio) with only $58.6M cash on $14.4B assets creates limited financial flexibility
- Weak liquidity ratios (current ratio 0.84x, quick ratio 0.22x) raise concerns about short-term obligation coverage
Key Metrics to Watch
- Free cash flow generation and trend—critical given -$197.5M current level
- Operating margin sustainability as gross margin pressures emerged
- Debt reduction pace and leverage trajectory given 1.58x D/E ratio
- Inventory turnover and working capital efficiency affecting liquidity ratios
AN Financial Metrics
AN Profitability Ratios
AN Balance Sheet & Liquidity
AN 5-Year Financial Trend
5-Year Trend Summary: AUTONATION, INC.'s revenue has shown modest growth of 7% over the 5-year period. The most recent EPS of $22.74 reflects profitable operations.
AN Growth Metrics (YoY)
AN Quarterly Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q3 2025 | $6.6B | $86.4M | $4.61 |
| Q2 2025 | $6.5B | $86.4M | $2.26 |
| Q1 2025 | $6.5B | $175.5M | $4.45 |
| Q3 2024 | $6.6B | $130.2M | $4.61 |
| Q2 2024 | $6.5B | $130.2M | $3.20 |
| Q1 2024 | $6.4B | $190.1M | $4.49 |
| Q3 2023 | $6.7B | $243.7M | $5.54 |
| Q2 2023 | $6.9B | $272.5M | $6.02 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
AN Capital Allocation
AN SEC Filings
Access official SEC EDGAR filings for AUTONATION, INC. (CIK: 0000350698)