If You Invested $1000 in AutoNation a Decade Ago, This is How Much It'd Be Worth Now
For most investors, how much a stock's price changes over time is important. Not only can it impact your investment portfolio, but it can also help you compare investment results across sectors and industries.
The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.
What if you'd invested in AutoNation (AN) ten years ago? It may not have been easy to hold on to AN for all that time, but if you did, how much would your investment be worth today?
AutoNation's Business In-Depth
With that in mind, let's take a look at AutoNation's main business drivers.
Incorporated in Delaware in 1991, AutoNation, Inc. is the largest automotive retailer in the United States. The company offers vehicle maintenance and repair services, vehicle parts, extended service contracts, vehicle protection products, and other aftermarket products. In addition, it arranges financing for vehicle purchases through third-party sources.
As of Dec 31, 2020, AutoNation owned and operated over 315 new vehicle franchises from 230 stores located in the United States. As of 2020 end, the company owned 74 AutoNation-branded collision centers, 5 AutoNation USA used vehicle stores, 4 AutoNation-branded automotive auction operations, and 3 parts distribution centers.
The core brands of new vehicles that the firm sells accounted for around 89% of the new vehicles that AutoNation sold in 2020. The core brands offered by the company are — Toyota, Ford, Honda, General Motors, FCA US, Mercedes-Benz, Nissan, BMW and Volkswagen.
AutoNation’s business is divided into three operating segments — Domestic (accounted for about 33% of the company’s revenues in 2020), Import (30.4%) and Premium Luxury (36.6%).
The Domestic segment includes stores that sell vehicles manufactured by General Motors, Ford and Fiat Chrysler; whereas the Import segment comprises stores that sell vehicles manufactured by Toyota, Honda, Nissan, Hyundai and others.
The Premium Luxury segment includes stores that sell vehicles manufactured by Daimler (Mercedes Benz division), BMW, Toyota (Lexus division), Audi and others. Its diversified set of automotive retail franchises supports the automotive retailer’s business, which is sensitive to macroeconomic conditions.
In 2020, new vehicle sales generated 51% of revenues, used vehicle sales accounted for 27.4%, parts and services (also referred as “customer care”) added 16%, finance & insurance (also referred to as “customer financial services”) constituted 5.2%, and other revenues accounted for 0.4%. In terms of gross profit, the largest contributor was parts and services with 41%, followed by finance & insurance with 29.7%, new vehicle with 16.4%, and used-vehicle with 12.9%.
Bottom Line
While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in AutoNation ten years ago, you're probably feeling pretty good about your investment today.
A $1000 investment made in May 2011 would be worth $3,159.82, or a gain of 215.98%, as of May 18, 2021, according to our calculations. This return excludes dividends but includes price appreciation.
In comparison, the S&P 500 gained 213.27% and the price of gold went up 19.99% over the same time frame.
Analysts are anticipating more upside for AN.
AutoNation’s diversified product mix and multiple streams of income reduce its risk profile and bode well for top and bottom-line growth. Strong footprint, large dealer network and store expansion efforts are expected to drive long term profitability. Increased focus on cost discipline is anticipated to aid margins. With the launch of its digital platform AutoNation Express, the company has stepped up its digitization game. Enhanced digital solutions will help AutoNation to boost profitability. Impending buyout of 11 stores and a collision center from Peacock Automotive Group is set to buoy AutoNation’s portfolio and add $380 million in its annual revenues. Strong financials and investor friendly moves instill further optimism. As such, the stock warrants a bullish stance at the moment.
The stock is up 8% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 7 higher, for fiscal 2021. The consensus estimate has moved up as well.
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