$AutoNation (AN.US)$🎯 August 8, 2023, the current price is ...

New data: Second half of 2022 and full year, first two quarters of 2023.

In 2022, revenue increased by 4.4%, operating profit increased by 6.4%, and net income increased by 0.32%. Interest expense accounts for 8.7% of operating profit, which is not a heavy burden.

In the first two quarters of 2023, revenue decreased by 2.5%, operating profit decreased by 18.1%, net income decreased by 24%, and interest expense increased to 16.6% of operating profit, indicating a heavier burden.

In 2022, the debt-to-asset ratio increased from 73.4% to 79.6%. The proportion and growth rate of accounts receivable and inventory are relatively normal. In Q2 2023, the debt-to-asset ratio increased further to 81.1%. The growth rate of inventory accelerated, increasing by 0.52 billion in the two quarters, while the current profit was only 0.561 billion.

Goodwill and other intangible assets amount to 2.397 billion, 1.15 times the net assets of 2.092 billion.

Short-term borrowings surged to 3.07 billion, long-term borrowings increased to 3.834 billion, indicating a very high leverage ratio.

In the past two years, the company has been very aggressive in canceling stocks. In 2021, 20% of the stocks were canceled, and in 2022, 25% were canceled, with a cumulative cancellation of 40%. The current stock inventory is 2.103 billion, and it is expected to cancel more stocks this year.

Currently, the P/E ratio is 6.4, and the trailing P/E ratio has increased slightly to 6.44. If the net income declines by 25% for the whole year, the P/E ratio will rise to 8.5. Considering the high leverage ratio of this stock and the contraction of the current sector, it is advisable to reduce the position appropriately.