Lithia Motors (NYSE:LAD) Issues Quarterly Earnings Results

Lithia Motors (NYSE:LAD) released its quarterly earnings data on Wednesday. The company reported $10.03 earnings per share for the quarter, topping analysts’ consensus estimates of $8.73 by $1.30, Zacks reports. Lithia Motors had a net margin of 1.88% and a return on equity of 12.49%. The company’s quarterly revenue was up 2.2% compared to the same quarter last year. During the same quarter in the previous year, the company earned $10.24 EPS.

Here are the key takeaways from Lithia Motors’ conference call:

• Record quarterly results: Revenue reached $9.8 billion and adjusted diluted EPS rose 9% year over year to $10.03. Management highlighted stable new-vehicle margins, stronger used-vehicle profitability, and resilient after-sales earnings despite difficult comparisons.
• Cost reductions are gaining traction: Adjusted SG&A improved sequentially to 68.6% of gross profit, while same-store SG&A dollars declined year over year and June expenses were below the prior-year level. Lithia expects further savings from role consolidation, automation, vendor reductions, and Pinewood.AI.
• DFC continued to scale rapidly: Record originations of $884 million, a 4.8% net interest margin, and managed receivables above $5 billion helped financing operations income reach $37 million, more than double the prior year. Penetration reached 18% in North America, with a long-term target of at least 20%.
• Shareholder returns remained a priority: The company repurchased $242 million of stock during the quarter, reducing its share count 17% from a year ago, and raised its dividend 23% to $0.70 per share. Management expects to balance future buybacks with acquisitions, internal investment, and dividends.
• Growth outlook depends on execution and mix: Management expects used-vehicle volumes to be flat to up mid-single digits in the second half, while new-vehicle gross profit per unit appears stabilized around $2,700–$2,800. U.K. growth is benefiting from Chinese OEM partnerships, but those brands currently provide limited after-sales and used-vehicle contribution.

Lithia Motors Stock Performance

NYSE:LAD traded up $67.40 during trading hours on Wednesday, reaching $425.71. 761,237 shares of the company’s stock were exchanged, compared to its average volume of 311,676. Lithia Motors has a 1-year low of $239.78 and a 1-year high of $422.84. The company has a quick ratio of 0.24, a current ratio of 0.99 and a debt-to-equity ratio of 1.41. The firm has a market capitalization of $9.71 billion, a price-to-earnings ratio of 14.90, a P/E/G ratio of 0.81 and a beta of 1.26. The company has a 50-day moving average of $305.81 and a 200 day moving average of $294.24.

Analysts Set New Price Targets

LAD has been the topic of a number of recent analyst reports. Wells Fargo & Company increased their target price on shares of Lithia Motors from $305.00 to $306.00 and gave the company an “equal weight” rating in a research report on Monday, July 6th. Barclays reduced their price target on shares of Lithia Motors from $370.00 to $360.00 and set an “overweight” rating for the company in a research report on Wednesday, July 15th. Citigroup raised their price objective on Lithia Motors from $326.00 to $365.00 and gave the stock a “buy” rating in a report on Friday, May 1st. UBS Group lifted their target price on Lithia Motors from $348.00 to $370.00 and gave the stock a “buy” rating in a research report on Friday, July 10th. Finally, JPMorgan Chase & Co. upped their target price on Lithia Motors from $320.00 to $325.00 and gave the company a “neutral” rating in a research report on Thursday, May 7th. Eight investment analysts have rated the stock with a Buy rating and four have issued a Hold rating to the company. Based on data from MarketBeat, the company presently has an average rating of “Moderate Buy” and an average target price of $380.33.

Insider Transactions at Lithia Motors

In other Lithia Motors news, Director Richard J. Bailey, Jr. sold 297 shares of the company’s stock in a transaction that occurred on Tuesday, May 26th. The stock was sold at an average price of $280.57, for a total transaction of $83,329.29. Following the completion of the sale, the director directly owned 760 shares of the company’s stock, valued at $213,233.20. This represents a 28.10% decrease in their position. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which is available at the SEC website. Also, Director Shauna Mcintyre sold 165 shares of the company’s stock in a transaction that occurred on Wednesday, June 10th. The stock was sold at an average price of $305.64, for a total value of $50,430.60. Following the sale, the director owned 1,681 shares of the company’s stock, valued at $513,780.84. This trade represents a 8.94% decrease in their position. The SEC filing for this sale provides additional information. Insiders sold 782 shares of company stock valued at $229,572 over the last ninety days. Corporate insiders own 1.08% of the company’s stock.

Institutional Trading of Lithia Motors

Several hedge funds have recently made changes to their positions in LAD. Quarry LP increased its stake in shares of Lithia Motors by 101.9% during the fourth quarter. Quarry LP now owns 109 shares of the company’s stock worth $36,000 after acquiring an additional 55 shares during the period. Los Angeles Capital Management LLC purchased a new stake in Lithia Motors in the 4th quarter valued at approximately $38,000. Parallel Advisors LLC increased its position in Lithia Motors by 26.8% during the 4th quarter. Parallel Advisors LLC now owns 156 shares of the company’s stock worth $52,000 after purchasing an additional 33 shares during the period. State of Wyoming purchased a new position in shares of Lithia Motors during the 2nd quarter worth approximately $67,000. Finally, Kestra Advisory Services LLC acquired a new stake in shares of Lithia Motors in the 4th quarter valued at approximately $68,000.

Key Stories Impacting Lithia Motors

Here are the key news stories impacting Lithia Motors this week:

• Positive Sentiment: Earnings exceeded expectations: Lithia reported adjusted diluted earnings of $10.03 per share, above analysts’ consensus estimates of approximately $8.67–$8.73. Reported diluted EPS was $11.54, while adjusted EPS increased 9% year over year. Lithia Motors Q2 Earnings and Revenues Top Estimates
• Positive Sentiment: Record revenue and operating improvements: Second-quarter revenue reached a record $9.8 billion. Used-vehicle retail gross profit per unit rose $339, or 20%, sequentially; aftersales gross margin improved 120 basis points to 59.2%; and adjusted selling, general and administrative expenses improved as a percentage of gross profit. Lithia & Driveway Reports Second Quarter Results
• Positive Sentiment: Shareholder returns strengthened: Lithia repurchased $242 million of stock during the quarter, equal to 3.7% of outstanding shares, and increased its quarterly dividend by 23%. Record financing income and originations also supported the results. Lithia Motors Shares Rally on Record Q2 Revenue
• Neutral Sentiment: Mixed year-over-year context: Revenue increased 2.2% from the prior year, but adjusted EPS of $10.03 was below the $10.24 reported in the comparable quarter. Investors will likely focus on whether the gains in used-car margins, aftersales and cost control can continue.

Lithia Motors announced that its Board of Directors has authorized a share buyback program on Tuesday, May 26th that allows the company to buyback $500.00 million in shares. This buyback authorization allows the company to reacquire up to 7.9% of its stock through open market purchases. Stock buyback programs are often an indication that the company’s board of directors believes its shares are undervalued.

Lithia Motors Company Profile

Lithia Motors, Inc is an American automotive retailer headquartered in Medford, Oregon. Founded in 1946 as a small auto body and glass shop, the company has grown through organic expansion and strategic acquisitions to become one of the largest automotive retail networks in North America. Lithia operates dealerships across the United States and Canada, offering a broad portfolio of new and pre-owned vehicles from more than 40 different manufacturers.

The company’s core business activities include vehicle sales, financing, insurance, parts and service.