AutoNation, Inc. (A) shares has increased by over 6% during Thursday’s session after the company reported better-than-expected financial results. Revenue fell 15.3% to $4.53 billion in the second quarter, beating the consensus estimates by $ 440 million, while non-GAAP earnings per share came in at $1.41, beating consensus estimates by $1.04 per share. Same-store new vehicle sales declined 17.1%, while same store used vehicle sales decreased 2.4% during the quarter. Selling, general and administrative expenses (SG&A) remained close to its target rate of 69% of the gross margin.
Despite the worsening of the pandemic in the united States, AutoNation has confirmed that this is still the construction of more and more autonomous vehicles pre-owned sales and service centers and at least 20 additional stores during the next three years. The company continues to pursue the development of its computing capacity to adjust to changing consumer behaviors throughout the pandemic.
The upward movement for AutoNation comes after Lithia Motors, Inc. (DAL), one of the largest automobile retailers in the united States, has reported its highest ever earnings per share, on July 22, and has pointed to a strong sequential improvement during the second quarter.
From a technical point of view, AutoNation stock moved towards the trend line resistance at $56.50. The relative strength index (RSI) rose again in overbought territory with a reading of 80.81, but the moving average convergence divergence (MACD) has continued its bullish cross. These indicators suggest that the stock could see some short-term consolidation before resuming its larger uptrend.
Traders should watch for consolidation between the trend line resistance at $56.50, and the trend line support near $45.00 in the coming sessions. If the stock breaks out, traders could see a move to new highs. If the stock breaks down, traders could see a move towards the 50-day moving average of $42.62, or the 200-day moving average at around $40.30, although this seems less likely to occur.
The author holds no position in the stock(s) mentioned except through the passive management of index funds.