Yesterday AM, 2/15/17, LAD reported Q4 16 results. Total Revenue growth of 15.0% beat Consensus of 11.0% and our 13.6%. Adj. EPS of $1.86 was in line with Consensus of $1.87 and our $1.86 (Exhibit 5). LAD also reaffirmed 2017 guidance. As always, LAD management was flush with details that we believe alleviated investor concerns around market share, Chrysler expansion, and integration/margins. LAD shares were up 2%.
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This morning (2/15/17) LAD reported Q4 16 results. Total Revenue growth of 15% beat Consensus of 11.0% and our 13.6%. Adj. EPS of $1.86 was in line with Consensus of $1.87 and our $1.86. LAD also reaffirmed 2017 guidance. Our initial read-through to the print is in-line to slightly positive. We believe the volume strategy is working, but see continued risk to margins given the volume based strategy and incentive environment. We also see LAD as an initial beneficiary from the election on higher sentiment, but believe action from the administration will be needed to support the lift.
Tues (2/7/17) after market close ORLY reported Q4 16 results. SSS of 4.8% beat Consensus/our 4.2%/4.5%. EPS of $2.59 beat Consensus/our $2.54/$2.50. ORLY’s Q1 17 guidance of 2-4% is lower than its usual guidance and full-year guidance of 3-5%. Mid-point EPS of $2.83 missed Consensus/our $2.93. However, investors looked past the weak Q1 guide in favor of the 2017 annual guide and online defense. Stock was up ~4% today (2/8/17).
We believe the buy-side bar for ORLY’s FQ4 was a 4 - 4.5% with Census data turning slightly less negative y/y sequentially, but with concerns around the slower than anticipated start to winter. ORLY shares are down ‑6% YTD versus the S&P 500’s +2% gain. ORLY’s closest peers AZO and AAP are down -9% and -6%, respectively as weather and e-commerce concerns have weighed on the group in 2017.
This morning (2/7/17) ABG reported Q4 16 results. Volume was strong and improved sequentially y/y. New and Used Unit comps were +1.5% and +6.9%, respectively. Revenue beat Consensus by 2.5% and our estimate by 4.7%. New and Used SSS $GP/Unit were -6.0% and -5.8%, respectively. Adj. EPS of $1.56 beat Cons. of $1.43 and our $1.42. Shares were +3.8%.
Q4 Earnings – Friday morning AN reported Q416 results. Revenue missed Consensus by 2.5% but was in line with our estimate. Adj. EPS of $0.95 (GAAP $1.14) just missed Consensus of $0.96 but met our $0.95. SSS New Units and SSS New and Used $GP/Unit all came in light due to rising incentives and clearing recall vehicles. Shares were down -4%.
The three public franchised dealers that we cover are reporting in the coming weeks including: AN (2/3), ABG (2/7), and LAD (2/15). Auto Dealer stocks have been on a tear since the election, a strong December SAAR offers potential upside to the print, but we believe margins and recalls could cap gains and are therefore holding our estimates and valuation into the print. See Exhibit 1 for our estimates vs Consensus.
On Sunday night (1/22/17) the New York Post issued an article on Amazon’s further encroachment into the Auto Parts category including news that Amazon (Covered by Scott Mushkin) has struck contracts with some of the largest aftermarket parts manufacturers in the country.
Late last night (1/22/2017) the New York Post issued an article on Amazon’s further encroachment into the Auto Parts category including news that Amazon has struck contracts with some of the largest aftermarket parts manufacturers in the country.
We believe the combination of rising new vehicle incentives, rising rates, and a near-term spike in consumer confidence drove December vehicle sales higher (Exhibit 2). A recent U. Of Michigan study pegged a 40pt benefit to consumer confidence for Republicans, 9pt increase for Independents, and a -13pt decrease for democrats.
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