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

Lithia Motors (NYSE:LAD) issued its earnings results on Wednesday. The company reported $10.03 earnings per share (EPS) for the quarter, topping the consensus estimate of $8.73 by $1.30, Zacks reports. Lithia Motors had a net margin of 1.88% and a return on equity of 12.16%. The business had revenue of $9.79 billion for the quarter, compared to analyst estimates of $9.64 billion. During the same period in the prior year, the firm earned $10.24 earnings per share. Lithia Motors’s revenue was up 2.2% on a year-over-year basis.

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 Price Performance

NYSE:LAD traded down $16.77 during mid-day trading on Friday, hitting $388.26. 239,202 shares of the stock traded hands, compared to its average volume of 321,356. Lithia Motors has a 12-month low of $239.78 and a 12-month high of $439.49. The company has a quick ratio of 0.24, a current ratio of 1.00 and a debt-to-equity ratio of 1.46. The company has a market cap of $8.85 billion, a PE ratio of 12.84, a price-to-earnings-growth ratio of 1.00 and a beta of 1.26. The business’s 50-day moving average price is $311.56 and its 200 day moving average price is $295.39.

Lithia Motors Increases Dividend

The company also recently disclosed a quarterly dividend, which will be paid on Friday, August 21st. Investors of record on Friday, August 7th will be paid a $0.70 dividend. The ex-dividend date is Friday, August 7th. This represents a $2.80 dividend on an annualized basis and a yield of 0.7%. This is an increase from Lithia Motors’s previous quarterly dividend of $0.57. Lithia Motors’s dividend payout ratio (DPR) is presently 9.29%.

Insider Transactions at Lithia Motors

In other Lithia Motors news, Director Shauna Mcintyre sold 245 shares of the firm’s stock in a transaction dated Monday, May 11th. The stock was sold at an average price of $294.64, for a total transaction of $72,186.80. Following the sale, the director owned 1,846 shares in the company, valued at $543,905.44. This trade represents a 11.72% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the SEC, which is available at this hyperlink. Also, 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 value of $83,329.29. Following the completion of the sale, the director directly owned 760 shares of the company’s stock, valued at approximately $213,233.20. This represents a 28.10% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. Insiders sold a total of 782 shares of company stock worth $229,572 over the last 90 days. Corporate insiders own 1.08% of the company’s stock.

Institutional Inflows and Outflows

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

Trending Headlines about Lithia Motors

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

• Positive Sentiment: Better-than-expected second-quarter results: Lithia reported adjusted earnings of $10.03 per share versus the $8.73 consensus estimate, while revenue of $9.79 billion exceeded expectations of $9.64 billion. Stronger used-vehicle margins, aftersales growth and record financing income helped offset mixed sales trends. LAD Q2 Earnings Beat on Used Margins and Financing Growth
• Positive Sentiment: Analysts raised price targets: Benchmark lifted its target from $400 to $475 and maintained a “buy” rating, implying substantial additional upside. Wells Fargo raised its target from $306 to $395, although it kept an “equal weight” rating. Lithia Motors Price Target Raised to $475 at Benchmark Lithia Motors Given New $395 Price Target at Wells Fargo
• Positive Sentiment: Momentum and shareholder returns remain supportive: Zacks highlighted LAD as a strong momentum stock, while Lithia increased its quarterly dividend 22.8% to $0.70 per share, payable August 21 to shareholders of record August 7. Why Lithia Motors Is a Strong Momentum Stock
• Neutral Sentiment: Brokerages collectively maintain a “moderate buy” recommendation, suggesting constructive sentiment but not unanimous conviction. Lithia Motors Receives Moderate Buy Recommendation
• Negative Sentiment: One valuation analysis argued that LAD could be roughly 15% above fair value following the earnings-driven surge. That concern, combined with mixed sales trends and profit slightly below the year-ago quarter, may be prompting profit-taking after the rally. Lithia Motors Could Be 15% Above Fair Value After Earnings Beat

Wall Street Analyst Weigh In

A number of research firms have recently issued reports on LAD. Wall Street Zen cut shares of Lithia Motors from a “hold” rating to a “sell” rating in a research report on Monday, July 20th. Barclays decreased their price objective on Lithia Motors from $370.00 to $360.00 and set an “overweight” rating for the company in a report on Wednesday, July 15th. Benchmark increased their target price on Lithia Motors from $400.00 to $475.00 and gave the stock a “buy” rating in a report on Thursday. JPMorgan Chase & Co. lifted their price target on shares of Lithia Motors from $320.00 to $325.00 and gave the company a “neutral” rating in a research report on Thursday, May 7th. Finally, Jefferies Financial Group restated a “buy” rating and set a $490.00 price objective on shares of Lithia Motors in a report on Thursday. Seven equities research analysts have rated the stock with a Buy rating and five have issued a Hold rating to the company. Based on data from MarketBeat.com, the stock currently has a consensus rating of “Moderate Buy” and a consensus price target of $414.70.

Lithia Motors declared that its board has authorized a stock repurchase program on Tuesday, May 26th that allows the company to repurchase $500.00 million in shares. This repurchase authorization allows the company to buy up to 7.9% of its stock through open market purchases. Stock repurchase programs are usually a sign that the company’s leadership 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.