A Fresh Look at AutoNation (AN) Valuation After Expanding Its $11.5 Billion Buyback Plan

AutoNation (AN) just expanded its equity buyback plan by $1,000 million, bringing the total repurchase authorization to $11,500 million. This signals ongoing confidence from management in the company’s long-term outlook.

See our latest analysis for AutoNation.

AutoNation’s expanded buyback comes after a solid run, with a year-to-date share price return of 16.1% and a robust 1-year total shareholder return of 17.9%. While the past month saw softer momentum, the stock’s longer-term total returns, including an impressive 218% over five years, highlight strong value creation and investor optimism connected to strategic moves like this.

If AutoNation’s large-scale buyback has you rethinking what’s next for the auto sector, consider exploring the wider landscape with our auto manufacturers screener: See the full list for free.

But with shares still trading about 19% below analyst targets and nearly 40% beneath some intrinsic value estimates, the key question is whether the market is overlooking a bargain or fully factoring in future growth potential.

Most Popular Narrative: 15.1% Undervalued

AutoNation's most followed narrative pegs fair value at $228.30, notably above the last close of $193.86. The gap grabs attention for those scoping potential value dislocations or looking for clear quantitative reasoning behind market optimism.

Significant investment and operational emphasis on digital transformation, including enhanced data analytics, omnichannel sales, and improving inventory/pricing management, leverages accelerating consumer preference for online research and purchasing, broadening customer reach and driving higher topline and operating margin efficiency.

Read the complete narrative.

Curious what big assumptions drive this bold fair value? Digital strategy shifts meet ambitious margin targets, and future earnings multiples matter. Want to reveal the precise numbers that made this narrative so bullish? Dive in to see the full picture.

Result: Fair Value of $228.30 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, competition from direct-to-consumer models and the rapid rise of electric vehicles could squeeze margins and challenge AutoNation’s current growth trajectory.

Find out about the key risks to this AutoNation narrative.

Another View: Numbers Behind the Narrative

Taking a look at our DCF model offers a stark contrast. It places AutoNation’s fair value at $322.39, which is far above both recent prices and analyst consensus. This suggests a potentially substantial disconnect, but it also raises questions: Is the market missing key growth drivers, or is the DCF approach too optimistic given today’s risks?

Look into how the SWS DCF model arrives at its fair value.

Build Your Own AutoNation Narrative

If you see the story differently or want to test your own ideas, you can dig into the numbers and shape a custom narrative in just a few minutes. Do it your way

A great starting point for your AutoNation research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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