AutoNation, Inc. (AN), through its subsidiaries, operates as an automotive retailer in the United States. The company operates in three segments: Domestic, Import, and Premium Luxury. It offers a range of automotive products and services, including new vehicles, used vehicles, parts and service, which includes automotive repair and maintenance services, as well as wholesale parts and collision businesses; and automotive finance and insurance products that comprise arranging financing for vehicle purchases through third-party finance sources. As of May 2, 2013, the company owned and operated 263 new vehicle franchises, which sell 32 brands in 15 states. AutoNation, Inc. was founded in 1991 and is headquartered in Fort Lauderdale, Florida. AN employs 21000 full time employees.
Today AN trades at $46.23. Discounted Cash Flow (DCF) valuation method states that fair value for AN is a negative number but Graham valuation returns result of fair value for AN at $52.93. Once again here is a mixed results form valuation methods. Even with Graham value being higher than present price it is not high enough to meet the 25% margin of safety requirement. So the only conclusion in this situation is a SELL recommendation. Altogether it could be said that basically AN is overvalued.
And if AN is overvalued I won’t go any further with analysis. So SELL recommendation it is.