AutoNation, Inc. (AN): A Bull Case Theory

We came across a bullish thesis on AutoNation, Inc. on UnlearningCFA’s Blog’s Substack by UnlearningCFA. In this article, we will summarize the bulls’ thesis on AN. AutoNation, Inc.'s share was trading at $190.58 as of August 1^st. AN’s trailing and forward P/E were 11.96 and 9.84 ,respectively according to Yahoo Finance.

AutoNation recently disclosed a notable one-time performance-based RSU award for CEO Michael Manley in its latest proxy, marking a significant departure from past practices. Granted on March 1, 2025, the award offers up to 134,365 shares, with threshold performance yielding 26,873 shares, translating to over $25 million at the top end based on the $182 grant-date stock price.

The award is tied to absolute stockholder return over five years and includes service requirements, with cliff-vesting after the performance period and forfeiture upon voluntary resignation or retirement without “good reason.” Specific performance hurdles remain undisclosed, and the company stated that additional details will follow next year. This grant coincided with AutoNation’s regular annual awards, about two weeks after full-year results, suggesting no timing manipulation.

While the exact hurdles are unknown, modeling scenarios illustrate the potential upside. Assuming threshold performance aligns with a 5% CAGR, the stock would need to hit ~$232, making the award worth ~$6 million, modest relative to Manley’s typical $7–10 million annual stock compensation. At maximum performance, likely implying a 15% CAGR and a ~$366 stock price, the payout could reach ~$49 million, significantly exceeding his historical grants. The award’s accounting value is $15 million, and Manley still received his standard ~$4.6 million RSU grant.

With AutoNation trading at 9–11x forward P/E and a continued focus on aggressive share repurchases, achieving double-digit CAGR appears plausible. Given the scale of this incentive and its alignment with shareholder returns, the grant signals management’s confidence, making a compelling case to back Manley’s long-term strategy.

Previously, we covered a bullish thesis on Lithia Motors, Inc. (LAD) by Chit Chat Stocks in May 2025, which highlighted its acquisition-driven growth and strong service-based revenue. The stock has depreciated about 2.81% since our coverage due to macro headwinds. The thesis still stands as its consolidation strategy remains intact. UnlearningCFA shares a similar view but focuses on AutoNation’s CEO award as a key confidence signal and catalyst.

AutoNation, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 42 hedge fund portfolios held AN at the end of the first quarter which was 43 in the previous quarter. While we acknowledge the potential of AN as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.

Disclosure: None.