AutoNation Earnings: What to Watch

AutoNation Inc., the U.S.’s largest dealership chain, is scheduled to release its second-quarter earnings on Friday. Here’s what you need to know:

EARNINGS FORECAST: Analysts expect AutoNation to report second-quarter operating earnings of $1.04 a share, up from $1 during the same period a year earlier.

REVENUE FORECAST: The Fort Lauderdale, Fla., company is expected to post revenue in the quarter of $5.52 billion, according to analysts polled by Thomson Reuters, compared with $5.2 billion a year ago.


— FIGHTING TO STEM PROFIT DECLINES: AutoNation’s earnings fell 16% and 14%, respectively, in the last two quarters. The company cited increased incentives and cars suffering damage from hail for the first-quarter drop.

— TRUCK CRAZE: Expect a continued surge in sales of pickup trucks and sport-utility vehicles that are less efficient than smaller cars. Low gasoline prices have combined with low interest rates to spur sales of larger vehicles, with dealers clamoring for additional inventory from auto makers. These vehicles represented about 59% of U.S. auto sales in June.

— NO RECALLED VEHICLES FOR SALE: AutoNation in September took the unusual step of halting the sale of any vehicles with open safety recalls on its dealer lots. AutoNation can better absorb the cost of foregoing such sales than smaller car-retailing businesses. Other dealers have opted to disclose open recalls when selling affected vehicles. AutoNation’s move came in wake of unprecedented government crackdown on auto makers over safety defects ranging from faulty General Motors Co.

— SCOOPING UP DEALERSHIPS: Expect Mr. Jackson to provide additional details or insights into AutoNation’s spree of acquiring smaller dealerships. AutoNation in early July said it would acquire four dealerships in Westchester County, N.Y., selling BMW, Jaguar and Land Rover vehicles and pour money into renovating the BMW location. AutoNation in June disclosed plans to take on Centennial Chrysler Jeep in Denver. Jeeps have proved especially popular among U.S. shoppers amid low fuel prices.

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