AutoNation, Inc. AN reported second-quarter 2026 adjusted earnings of $5.56 per share, up 1.8% from $5.46 a year ago. Earnings beat the Zacks Consensus Estimate of $5.43 by 2.4%. Results benefited from record After-Sales gross profit and stronger Customer Financial Services profitability. Revenues of $6.93 billion declined 0.6% year over year and missed the consensus estimate of $6.97 billion by 0.6%.
AutoNation, Inc. Price, Consensus and EPS Surprise
AutoNation, Inc. price-consensus-eps-surprise-chart | AutoNation, Inc. Quote
AN's After-Sales Business Delivers Record Profit
Parts and service revenues increased 3.4% year over year to $1.26 billion. Gross profit rose 1.4% to a record $607.1 million, making After-Sales the largest contributor to AutoNation's gross profit.
Customer-pay revenues increased 7% year over year, while wholesale parts revenues advanced 16%. Customer-pay repair orders rose 5% and warranty repair orders increased 8%. Parts and service gross margin declined to 48.1% from 49%, mainly reflecting a higher mix of lower-margin wholesale parts.
AutoNation's Finance Businesses Show Momentum
Customer Financial Services gross profit totaled $357.6 million, down 2.7% from $367.7 million a year earlier as lower retail vehicle volumes offset stronger per-unit profitability. CFS gross profit per vehicle retailed climbed 3.2% to $2,799 from $2,712. The improvement came despite an approximately 2% drag from higher AutoNation Finance originations.
AutoNation Finance, meanwhile, generated income of $10.7 million, up from $2 million a year ago. The portfolio reached $2.67 billion, increasing about 52% from $1.76 billion, while quarterly originations totaled $485 million. AN Finance accounted for 11% of total vehicle sales and 18% of financed vehicle sales, highlighting the growing contribution of the captive finance platform.
AN's Vehicle Volumes Remain Under Pressure
New vehicle revenues declined 3.1% to $3.29 billion as retail unit sales fell 4% to 63,240. New vehicle gross profit per unit dropped 14.5% to $2,381, reflecting higher vehicle costs. Much of the volume decline was due to weaker battery-electric vehicle sales and difficult comparisons against tariff-related demand pull-forward in 2025.
Used vehicle revenues increased 1.3% to $2.01 billion despite a 7.5% decline in retail unit sales to 64,521. Retail used vehicle revenue per unit increased 8.4% to $28,674, while gross profit per unit slipped 2.5% to $1,582.
AN's Gross Profit and Adjusted Income Decline
Total gross profit fell 3.5% year over year to $1.23 billion, with gross margin narrowing to 17.8% from 18.3%. Adjusted operating income declined 7% to $343.1 million from $369.3 million.
Adjusted SG&A expenses represented 68.2% of gross profit, improving sequentially from 69.8% in the first quarter but remaining above 66.2% a year ago. Management expects the ratio to reach its 66%-67% target range on a run-rate basis by year-end.
AutoNation's Cash Flow Funds Acquisitions and Buybacks
Adjusted free cash flow totaled $439.2 million in the first half of 2026, representing 125% of adjusted net income. AutoNation spent $316.5 million on acquisitions and $126 million on capital expenditures during the period.
The company also repurchased 2.3 million shares for $457 million in the first half. As of June 30, 2026, cash and cash equivalents were $53.3 million. Non-vehicle debt was $4.43 billion. AutoNation had about $1 billion of liquidity, including $0.9 billion available under its revolving credit facility, net of commercial paper borrowings.
AN Expects Earnings Growth in the Second Half
Management expects after-sales customer-pay gross profit to maintain mid-single-digit growth, supported by customer retention and technician capacity. With stable vehicle unit profitability, continued CFS and After-Sales growth, AutoNation Finance expansion and a lower share count, management expects adjusted earnings per share to grow year over year in the second half of 2026.
AN stock currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Peer Releases
Penske Automotive Group, Inc. PAG reported second-quarter 2026 adjusted earnings of $3.62 per share, beating the Zacks Consensus Estimate of $3.38 by 7.1%. Adjusted earnings declined 4.2% from the comparable $3.78 per share a year ago. Penske’s revenues rose 6% year over year to $8.51 billion and topped the Zacks Consensus Estimate of $7.93 billion by 7.4%. For the first six months of 2026, cash flow from operations totaled $418 million and capital expenditures were $134.9 million. As of June 30, Penske’s liquidity was about $1.4 billion, including $69.5 million in cash.
Sonic Automotive, Inc. SAH reported second-quarter 2026 adjusted earnings of $1.82 per share, down 17% year over year. Earnings beat the Zacks Consensus Estimate of $1.75 by 4%. Revenues rose 8% to $3.93 billion and topped the consensus mark of $3.78 billion by 4%. Sonic ended the quarter with about $294 million of cash and floor plan deposits and roughly $676 million of total available liquidity. The company raised full-year new-vehicle gross profit per unit guidance to $2,850-$3,000 from $2,700-$3,000. Sonic’s EchoPark unit is still expected to deliver 12%-15% retail used-unit growth this year.
Lithia Motors LAD posted second-quarter 2026 adjusted earnings of $10.03 per share, which increased 9% from $9.20 a year ago. The bottom line beat the Zacks Consensus Estimate of $8.67 by 15.7%. Quarterly revenues increased 2.2% year over year to $9.79 billion and topped the consensus estimate of $9.64 billion by 1.6%. As of June 30, 2026, Lithia had cash, restricted cash and cash equivalents of $363.9 million, up from $341.8 million as of Dec. 31, 2025. During the quarter, Lithia repurchased roughly 854,000 shares at a weighted average price of $284, representing $242 million of share repurchases.
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This article originally published on Zacks Investment Research (zacks.com).