Lithia Motors (NYSE:LAD) Releases Quarterly Earnings Results, Beats Estimates By $1.30 EPS

Lithia Motors (NYSE:LAD) posted its quarterly earnings results on Wednesday. The company reported $10.03 EPS for the quarter, topping analysts’ consensus estimates of $8.73 by $1.30, Zacks reports. The company had revenue of $9.79 billion during the quarter, compared to analysts’ expectations of $9.64 billion. Lithia Motors had a return on equity of 12.49% and a net margin of 1.88%.Lithia Motors’s revenue was up 2.2% on a year-over-year basis. During the same quarter in the previous year, the firm 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 Trading Down 6.2%

Shares of NYSE:LAD traded down $26.48 during mid-day trading on Thursday, hitting $401.00. The company had a trading volume of 302,251 shares, compared to its average volume of 318,496. The company has a debt-to-equity ratio of 1.41, a current ratio of 0.99 and a quick ratio of 0.24. Lithia Motors has a one year low of $239.78 and a one year high of $439.49. The firm has a fifty day moving average price of $308.92 and a 200 day moving average price of $294.90. The company has a market capitalization of $9.15 billion, a PE ratio of 14.09, a price-to-earnings-growth ratio of 0.84 and a beta of 1.26.

Lithia Motors Increases Dividend

The business also recently disclosed a quarterly dividend, which will be paid on Friday, August 21st. Stockholders of record on Friday, August 7th will be given a dividend of $0.70 per share. This is a positive change from Lithia Motors’s previous quarterly dividend of $0.57. The ex-dividend date of this dividend is Friday, August 7th. This represents a $2.80 annualized dividend and a dividend yield of 0.7%. Lithia Motors’s payout ratio is 8.01%.

Insiders Place Their Bets

In other news, Director Shauna Mcintyre sold 165 shares of the firm’s stock in a transaction dated Wednesday, June 10th. The stock was sold at an average price of $305.64, for a total value of $50,430.60. Following the completion of the sale, the director directly owned 1,681 shares in the company, valued at $513,780.84. This trade represents a 8.94% decrease in their position. The sale was disclosed in a filing with the SEC, which is available at this link. Also, Director Richard J. Bailey, Jr. sold 297 shares of the firm’s stock in a transaction that occurred on Tuesday, May 26th. The shares were sold at an average price of $280.57, for a total value 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 trade represents a 28.10% decrease in their position. The disclosure for this sale is available in the SEC filing. Insiders sold 782 shares of company stock valued at $229,572 over the last 90 days. Corporate insiders own 1.08% of the company’s stock.

Institutional Trading of Lithia Motors

Hedge funds and other institutional investors have recently bought and sold shares of the business. MIRAE ASSET GLOBAL ETFS HOLDINGS Ltd. grew its holdings in shares of Lithia Motors by 13.9% during the first quarter. MIRAE ASSET GLOBAL ETFS HOLDINGS Ltd. now owns 8,474 shares of the company’s stock valued at $2,487,000 after buying an additional 1,032 shares during the last quarter. Goldman Sachs Group Inc. boosted its stake in Lithia Motors by 67.6% during the 1st quarter. Goldman Sachs Group Inc. now owns 113,346 shares of the company’s stock valued at $33,272,000 after purchasing an additional 45,716 shares during the last quarter. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC increased its holdings in Lithia Motors by 16.8% during the 1st quarter. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC now owns 93,170 shares of the company’s stock worth $27,349,000 after purchasing an additional 13,407 shares in the last quarter. Federated Hermes Inc. raised its stake in shares of Lithia Motors by 16.2% in the second quarter. Federated Hermes Inc. now owns 2,430 shares of the company’s stock worth $821,000 after purchasing an additional 338 shares during the last quarter. Finally, WINTON GROUP Ltd purchased a new position in shares of Lithia Motors during the second quarter valued at approximately $651,000.

Lithia Motors announced that its Board of Directors has approved a stock repurchase program on Tuesday, May 26th that authorizes the company to buyback $500.00 million in shares. This buyback authorization authorizes the company to buy up to 7.9% of its shares through open market purchases. Shares buyback programs are often an indication that the company’s leadership believes its stock is undervalued.

Trending Headlines about Lithia Motors

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

• Positive Sentiment: Earnings and revenue exceeded expectations. Lithia reported record second-quarter revenue of approximately $9.8 billion, versus the $9.64 billion consensus estimate. Adjusted diluted EPS was $10.03, topping estimates ranging from $8.67 to $8.73, while revenue increased 2.2% year over year. Lithia & Driveway second-quarter results
• Positive Sentiment: Operating metrics improved. Used-vehicle retail gross profit per unit rose $339, or 20%, sequentially; aftersales gross margin increased to 59.2%; and financing operations generated record income of $37 million and originations of $884 million. The company also repurchased $242 million of stock during the quarter.
• Positive Sentiment: Shareholder returns increased. Lithia raised its quarterly dividend 22.8%, from $0.57 to $0.70 per share. Investors of record on August 7 will receive the dividend on August 21, with an annualized yield of roughly 0.7%. Lithia dividend increase
• Neutral Sentiment: Broker sentiment remains constructive but not strongly bullish. Analysts collectively maintain a “Moderate Buy” recommendation. Wells Fargo raised its price target from $306 to $395 but assigned an “Equal Weight” rating, implying only about 0.2% upside at the referenced market price.
• Negative Sentiment: Valuation may limit further gains. One analysis concluded that LAD could be approximately 15% above fair value following the earnings beat. This valuation concern, combined with the cautious Wells Fargo rating, may be weighing on the shares after their strong earnings-driven advance. Lithia Motors fair value analysis
• Negative Sentiment: Broader market risk is an additional headwind. A sharp oil-price increase tied to escalating U.S.-Iran tensions and weakness in major equity indexes created a risk-off backdrop that could pressure economically sensitive automotive retail stocks.

Analyst Ratings Changes

A number of research analysts have recently commented on the stock. Barclays dropped their target price on shares of Lithia Motors from $370.00 to $360.00 and set an “overweight” rating for the company in a report on Wednesday, July 15th. Bank of America increased their price objective on shares of Lithia Motors from $350.00 to $417.00 and gave the company a “buy” rating in a research note on Thursday, July 9th. Weiss Ratings upgraded Lithia Motors from a “hold (c-)” rating to a “hold (c)” rating in a research note on Tuesday, July 21st. Wall Street Zen lowered Lithia Motors from a “hold” rating to a “sell” rating in a research report on Monday, July 20th. Finally, UBS Group lowered Lithia Motors from a “buy” rating to a “neutral” rating and lifted their price target for the company from $370.00 to $440.00 in a research note on Thursday. Seven analysts have rated the stock with a Buy rating and five have issued a Hold rating to the company’s stock. According to MarketBeat, the company presently has a consensus rating of “Moderate Buy” and a consensus target price of $408.00.

About Lithia Motors

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.