AutoNation (AN) To Report Q2 Earnings: What's In The Cards?

AutoNation, Inc. (NYSE:AN) is expected to report second-quarter 2017 results, before the market opens on Aug 2. In the last quarter, the company delivered a positive earnings surprise of 6.59%.

The company delivered a positive earnings surprise in two of the trailing four quarters, while missed in two. Overall, it came up with an average positive earnings surprise of 1.45%.

Let’s see how things are shaping up for this announcement.

AutoNation, Inc. Price and EPS Surprise

AutoNation, Inc. Price and EPS Surprise | AutoNation, Inc. Quote

Factors Influencing this Quarter

AutoNation follows an aggressive share repurchase policy, boosting shareholder returns. As of Apr 25, 2017, the company had approximately $299 million remaining under its share repurchase program and around 101 million shares outstanding.

AutoNation also focuses on expansion through acquisitions. The company had earlier announced plans of opening its first two stores in Texas at Corpus Christi and Houston in the second quarter of 2017. The company also has plans of opening stores in three other markets in 2017.

However, the company's financial position has been weakening, with the cash balance declining. Used vehicles margin is also under pressure due to previously held inventory.

Earnings Whispers

Our proven model does not conclusively show that AutoNation is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below.

Zacks ESP: The Earnings ESP for AutoNation is +3.06% because the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.01 and 98 cents respectively.

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 #4 (Sell), which when combined with a positive ESP, makes surprise prediction difficult.

We caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks to Consider

Here are a few companies you may want to consider, as our model shows that these have the right combination of elements to come up with an earnings beat this quarter.

Cummins Inc. (NYSE:CMI) has an Earnings ESP of +3.1% and a Zacks Rank #2. The company is expected to report second-quarter 2017 results on Aug 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Westlake Chemical Corporation (NYSE:WLK) has an Earnings ESP of +5.04% and a Zacks Rank #2. The company’s second-quarter 2017 results are expected to release on Aug 3.

Horizon Global Corporation (NYSE:HZN) has an Earnings ESP of +2.99% and a Zacks Rank #3. The company’s second-quarter 2017 results are expected to release on Aug 1.

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