Yahoo Finance At US$155, Is AutoNation, Inc. (NYSE:AN) Worth Looking At Closely?
AutoNation, Inc. (NYSE:AN), is not the largest company out there, but it received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$171 at one point, and dropping to the lows of US$152. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether AutoNation's current trading price of US$155 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at AutoNation’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
View our latest analysis for AutoNation
Is AutoNation Still Cheap?
Great news for investors – AutoNation is still trading at a fairly cheap price. Our valuation model shows that the intrinsic value for the stock is $210.28, but it is currently trading at US$155 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because AutoNation’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
What kind of growth will AutoNation generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a negative profit growth of -9.9% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for AutoNation. This certainty tips the risk-return scale towards higher risk.
What This Means For You
Are you a shareholder? Although AN is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. We recommend you think about whether you want to increase your portfolio exposure to AN, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping an eye on AN for a while, but hesitant on making the leap, we recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
If you want to dive deeper into AutoNation, you'd also look into what risks it is currently facing. To help with this, we've discovered 3 warning signs (1 can't be ignored!) that you ought to be aware of before buying any shares in AutoNation.
If you are no longer interested in AutoNation, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
