AutoNation (AN) Stock Forecast & Price Target

AutoNation demonstrated strong financial performance in 4Q24, with same-store sales increasing by 7.7% year-over-year, driven by a notable 13.3% increase in new vehicle sales. The company's parts and service divisions also contributed positively, with gross profit dollars rising by 3.4% year-over-year, reflecting an ongoing demand for automotive services. Furthermore, the effective management of selling, general and administrative expenses resulted in SG&A as a percentage of gross profit improving to 66.3%, fostering a positive outlook for the company's operational efficiency and profitability.

AutoNation's financial performance has shown multiple signs of weakness, including a decline in both net operating margin by 31 basis points to 4.9% and a gross margin drop of 74 basis points year-over-year to 17.2%, falling short of estimates. Additionally, the company's retail sales of used units decreased by 0.5% year-over-year, while gross profit per new unit was notably lower at $2,969, representing a 19% decline compared to the same period last year. Furthermore, expectations for 2025 indicate a projected decrease in gross profit per unit to $2,680, alongside concerns regarding the stability of leadership that could adversely affect future performance.