Lithia Motors (LAD) AI Stock Analysis

• Market Cap: $5.84B
• Dividend Yield: 0.64%
• Average Volume (3M): 355.32K
• Price to Earnings (P/E): 10.3
• Beta (1Y): 1.01
• Revenue Growth: 8.56%
• EPS Growth: 17.84%
• Country: US
• Employees: 30,000
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Auto - Dealerships
• EPS (TTM): 6.74
• Shares Outstanding: 23,374,910
• 10 Day Avg. Volume: 340,608
• 30 Day Avg. Volume: 355,322
• PEG Ratio: 1.20
• Price to Book (P/B): 1.27
• Price to Sales (P/S): 0.22
• P/FCF Ratio: 43.99
• Enterprise Value/Market Cap: 3.45
• Enterprise Value/Revenue: 0.54
• Enterprise Value/Gross Profit: 3.60
• Enterprise Value/Ebitda: 10.00
• 1Y Price Target: $354.43
• Price Target Upside: 41.83% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 8
• EPS Forecast (FY): 36.46
• Revenue Forecast (FY): $39.16B

• Rating: 61 Neutral
• Price Target: $287.00 ▲(14.85% Upside)
• Action: Reiterated Date: 03/05/26
• Date: Action: Reiterated 03/05/26

The score is driven primarily by solid but risk-balanced fundamentals: continued revenue growth is offset by notable margin compression, elevated leverage, and uneven cash-flow conversion. Technicals are the main drag given the strong downtrend and bearish momentum despite oversold readings. Valuation is a support (low P/E), while the earnings call and recent financing update are moderately positive but tempered by ongoing margin and cost headwinds.

Positive Factors

Scale & Revenue Growth

Lithia's scale — $37.6B revenue in 2025 — gives durable advantages: broader supplier leverage, fixed-cost absorption, and scope to fund technology, M&A and franchise expansion. Large scale supports resilience across cycles and enables continued investment in Driveway and aftersales growth initiatives.

Driveway Finance Scaling

Driveway Finance is maturing into a higher‑margin, recurring revenue stream: managed receivables at $4.8B and expanding NIM diversify earnings away from front‑end vehicle GPU. Scaling DFC can sustainably increase pretax financing income and improve overall return on capital as penetration grows.

Aftersales & Used Volume Strength

Outperformance in aftersales and used-unit growth builds durable, high‑margin revenue and customer retention. Aftersales margins (~57%) and expanding used volumes provide stable cash flow less tied to industry cycles, supporting margin resilience and repeat business economics over the medium term.

Negative Factors

Elevated Leverage

Rapid debt growth to roughly $14.7B increases financial leverage in a cyclical dealership model. Elevated indebtedness amplifies earnings volatility during downturns, raises interest expense sensitivity, constrains flexibility for opportunistic M&A or buybacks, and heightens refinancing and covenant risk.

Margin / GPU Compression

Material GPU and gross‑margin declines reduce front‑end profitability and force SG&A deleverage. Sustained compression constrains free cash flow potential and earnings power, requiring persistent pricing discipline and operational fixes to prevent structurally lower net margins across cycles.

Volatile Cash Conversion

Inconsistent operating cash flow and free cash flow conversion weaken capital reliability. Multi‑year swings (negative OCF years, small 2024 FCF) make funding buybacks, acquisitions and high debt service less predictable, increasing execution risk for stated capital allocation plans.

Lithia Motors Business Overview & Revenue Model

Company Description

Lithia Motors, Inc. operates as an automotive retailer in the United States. The company operates through three segments: Domestic, Import, and Luxury. It offers new and used vehicles; vehicle financing services; warranties, insurance contracts, and vehicle and theft protection services; and automotive repair and maintenance services, as well as sells vehicle body and parts under the Driveway and GreenCars brand names. As of February 18, 2022, the company operated through 278 stores. It also offers its products online through 300 websites. Lithia Motors, Inc. was founded in 1946 and is headquartered in Medford, Oregon.

How the Company Makes Money

Lithia Motors generates revenue through several key streams. The primary source of income comes from the sale of new and used vehicles, which includes a wide range of makes and models from various manufacturers. Additionally, the company earns significant revenue from financing solutions offered to customers at the point of sale, often in partnership with financial institutions. Service and repair revenue is another substantial stream, stemming from their service departments that provide maintenance and repair work on vehicles. Furthermore, Lithia Motors benefits from parts sales, which complement their service offerings. The company also engages in strategic acquisitions of dealerships, which contribute to revenue growth and market expansion. Partnerships with manufacturers and financial companies enhance their service offerings, enabling Lithia to provide competitive financing options and expand their customer base.

Lithia Motors Financial Statement Overview

Summary

Revenue continues to grow, but profitability has materially compressed (gross margin down to ~15.2% in 2025 and net margin ~2.2%). Leverage has increased sharply with debt rising to ~$14.7B, elevating cyclical risk, while cash flow rebounded strongly in 2025 but has been volatile across prior years.

Income Statement

Revenue has continued to grow (about 6.5% in 2025 after stronger growth in 2024 and 2023), showing solid scale and demand resilience. However, profitability has been trending down versus earlier years: gross margin has eased from ~18.7% (2021) to ~15.2% (2025), and net margin has compressed to ~2.2% (2025) from ~4–5% (2021–2022). Net income has also declined from the 2022 peak, suggesting a tougher pricing/vehicle margin environment and/or higher costs, even as the top line expands.

Balance Sheet

Leverage is meaningful: total debt rose to ~$14.7B in 2025 from ~$5.0B in 2021, while equity has grown more modestly (to ~$6.6B). In the most recent year where the ratio is provided (2024), debt was a little over 2x equity, which is elevated for a cyclical dealership model and can amplify earnings volatility in weaker auto cycles. The asset base has expanded materially (to ~$25.1B in 2025), but the rapid debt build is the key balance-sheet risk factor.

Cash Flow

Cash generation has been volatile. Operating cash flow swung negative in 2022 and 2023, then rebounded sharply in 2025 to ~$2.0B, with free cash flow also strong at ~$1.67B. That said, 2024 free cash flow was very weak (~$74M) despite positive earnings, and in 2025 free cash flow covered only about 83% of net income, indicating profits are not consistently converting to cash. Overall, the latest year is strong, but the multi-year swings temper the quality-of-cash-flow assessment.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	37.63B	36.19B	31.04B	28.19B	22.83B
Gross Profit	5.47B	5.56B	5.23B	5.15B	4.26B
EBITDA	1.87B	2.26B	2.16B	2.19B	1.78B
Net Income	819.60M	802.00M	1.00B	1.25B	1.06B
Balance Sheet
Total Assets	25.11B	23.13B	19.63B	15.01B	11.15B
Cash, Cash Equivalents and Short-Term Investments	341.80M	402.20M	941.40M	246.70M	174.80M
Total Debt	14.69B	13.86B	11.33B	7.99B	4.96B
Total Liabilities	18.48B	16.45B	13.35B	9.76B	6.48B
Stockholders Equity	6.63B	6.66B	6.21B	5.21B	4.63B
Cash Flow
Free Cash Flow	191.90M	73.70M	-702.60M	-913.20M	1.54B
Operating Cash Flow	542.80M	425.10M	-472.40M	-610.10M	1.80B
Investing Cash Flow	-1.03B	-1.85B	-1.27B	-1.33B	-2.89B
Financing Cash Flow	426.00M	907.60M	2.41B	2.04B	1.11B

Lithia Motors Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 249.89
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LAD, the sentiment is Negative. The current price of 249.89 is below the 20-day moving average (MA) of 269.70, below the 50-day MA of 303.58, and below the 200-day MA of 315.90, indicating a bearish trend. The MACD of -15.49 indicates Positive momentum. The RSI at 23.19 is Positive, neither overbought nor oversold. The STOCH value of 3.53 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LAD.

Lithia Motors Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PAG	63 Neutral	$9.42B	11.20	16.04%	3.14%	2.25%	8.92%
ABG	62 Neutral	$3.65B	9.17	9.29%	―	8.07%	60.95%
GPI	62 Neutral	$3.68B	15.78	10.85%	0.49%	19.45%	-24.27%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
LAD	61 Neutral	$5.84B	10.30	12.08%	0.64%	8.56%	17.84%
KMX	60 Neutral	$5.93B	23.09	7.39%	―	0.12%	2.78%
AN	58 Neutral	$6.46B	12.12	26.70%	―	6.06%	-1.71%

Lithia Motors Corporate Events

Lithia Motors Extends and Amends Core Credit Facility

On February 27, 2026, Lithia Motors, Inc. amended its primary loan agreement, entering into a seventh amendment that extends the expiration of its sizable credit facility to February 27, 2031, with additional one-year extension options subject to lender consent and conditions. The revised terms maintain long-term financing visibility for the auto retailer and signal continued lender support for its capital-intensive dealership operations.

The amendment also allows Lithia to convert its used vehicle and service loaner floorplan facilities to VIN-specific reporting at its election, which would reallocate commitments to $2.7 billion for new vehicle floorplan, $1.25 billion for used vehicle floorplan, $150 million for service loaner floorplan, and $2.4 billion for the revolving line of credit. In addition, the removal of the Simple SOFR Adjustment simplifies the interest calculation framework, potentially refining the company’s funding costs and operational flexibility within its large syndicated lending structure.

The most recent analyst rating on (LAD) stock is a Buy with a $335.00 price target. To see the full list of analyst forecasts on Lithia Motors stock, see the LAD Stock Forecast page.

Lithia Motors Updates Bylaws to Adjust Board Size

On February 19, 2026, Lithia Motors’ Board of Directors approved an amendment to the company’s Amended and Restated Bylaws, effective that same day, eliminating the upper limit on the number of directors and allowing the Board to set its size by resolution. In conjunction with this governance change, the Board fixed its size at 10 directors for the purposes of electing directors at the company’s 2026 Annual Meeting of Shareholders, signaling flexibility for future Board expansion or adjustment as strategic needs evolve.

The most recent analyst rating on (LAD) stock is a Hold with a $335.00 price target. To see the full list of analyst forecasts on Lithia Motors stock, see the LAD Stock Forecast page.

Lithia Motors Realigns Technology Leadership Under Finance, Customer Units

Lithia Motors announced a reorganization of its technology leadership, shifting core IT and technology functions to report under Chief Financial Officer Tina Miller and Chief Customer Officer Dianna du Preez. This move is intended to align technology more closely with the company’s business operations, customer needs, and product support.

As part of this change, Senior Vice President and Chief Innovation and Technology Officer George Hines will step down from his executive role effective March 1, 2026, and remain with the company in a non-executive capacity to support an orderly transition. Lithia noted that Hines will also continue serving on the Pinewood.AI public board and publicly acknowledged his leadership and contributions during his tenure, signaling continuity in its broader technology strategy despite the leadership shift.

The most recent analyst rating on (LAD) stock is a Hold with a $355.00 price target. To see the full list of analyst forecasts on Lithia Motors stock, see the LAD Stock Forecast page.

Lithia Motors Posts Record 2025 Revenue Amid Margin Pressures

Lithia Motors operates in automotive retail, selling new and used vehicles and providing aftersales, financing and fleet services through both brick-and-mortar locations and digital platforms, including Driveway and Driveway Finance Corporation. Its diversified model is designed to modernize personal transportation and deliver profitable growth in a large, unconsolidated global market.

On February 11, 2026, Lithia & Driveway reported record full-year 2025 revenue of $37.63 billion, up 4% year over year, with diluted EPS rising about 10% despite softer fourth-quarter profits driven by margin pressures and lower new-vehicle performance. The company highlighted strong same-store used and aftersales growth, record income from its finance arm, $2.4 billion of acquired annualized revenue, share repurchases equal to 11.4% of shares outstanding in 2025 and a $0.55 per-share dividend tied to its fourth-quarter results, underscoring ongoing capital returns and expansion amid a challenging but dynamic market.

Lithia & Driveway’s fourth-quarter 2025 revenue was essentially flat at $9.20 billion, while net income and adjusted EPS declined versus the prior year as the company absorbed margin compression and headwinds in new vehicle sales. Nonetheless, the group exited the year with about $1.5 billion in liquidity and continued to balance acquisitions and divestitures, seeking to consolidate its position as the leading global auto retailer.

The most recent analyst rating on (LAD) stock is a Buy with a $390.00 price target. To see the full list of analyst forecasts on Lithia Motors stock, see the LAD Stock Forecast page.