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Lithia Motors (LAD)
NYSE:LAD
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Lithia Motors
(NYSE:LAD)73Outperform
Positive Factors
Financial Performance
Driveway Finance Corp. reached ~$4B in scale and achieved its first profitable year, generating $15.4M in income compared to a $45M loss last year.
Stock Valuation
The price target for LAD has been raised from $299 to $343, reflecting increased confidence in future performance.
Negative Factors
Sales Performance
Sales of $9.2B missed Visible Alpha's consensus of $9.5B.
Lithia Motors (LAD) vs. S&P 500 (SPY)
Market Cap
$8.33B
Dividend Yield0.66%
Average Volume (3M)411.97K
Price to Earnings (P/E)10.7
Beta (1Y)1.34
Revenue Growth16.75%
EPS Growth-18.09%
CountryUS
Employees27,446
SectorConsumer Cyclical
Sector Strength53
IndustryVehicles
Share Statistics
EPS (TTM)29.70
Shares Outstanding26,286,745
10 Day Avg. Volume353,592
30 Day Avg. Volume411,974
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.23
Price to Cash Flow (P/CF)33.70
P/FCF Ratio61.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$412.38Price Target Upside35.22% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering9
Lithia Motors Business Overview & Revenue Model
Company DescriptionLithia Motors, Inc. (LAD) is one of the largest automotive retailers in the United States, operating through a network of dealerships across the country. The company is engaged in the retail sale of new and used vehicles, and it also offers vehicle financing, insurance products, and automotive repair and maintenance services. Lithia Motors provides a wide range of vehicle brands and models, catering to diverse customer needs and preferences.
How the Company Makes MoneyLithia Motors generates revenue through multiple streams primarily centered around the sale of new and used vehicles. The sale of new vehicles accounts for a significant portion of its revenue, benefiting from partnerships with a variety of automotive manufacturers that supply a diverse fleet of cars and trucks. Additionally, the company earns from the sale of used vehicles, which often have higher profit margins compared to new vehicles. Another key revenue stream for Lithia Motors is its finance and insurance (F&I) offerings, where the company provides customers with financing options, extended warranties, and other insurance products, generating additional income through interest and service fees. Moreover, Lithia's service and parts division contributes to its earnings by providing maintenance, repair, and parts sales, ensuring continued customer engagement and revenue post-vehicle sale. These combined operations, along with strategic acquisitions and dealership expansion, drive Lithia Motors' overall profitability.
Lithia Motors Financial Statement Overview
Summary
Lithia Motors exhibits strong revenue growth and improved leverage management, positioning itself well in the vehicles industry. However, profitability margins and cash flow conversion remain areas needing attention. While the company has improved its financial stability, further efforts are required to enhance net income margins and cash flow efficiency to sustain long-term growth.Income Statement
Lithia Motors shows strong revenue growth over the years, with a significant jump from 2020 to 2024. The TTM revenue growth rate is 16.73%, indicating a robust expansion trajectory. Gross profit margin for TTM is 15.02%, reflecting solid profitability. However, the net profit margin decreased to 2.21% in the TTM period, down from 3.22% in 2023, suggesting some pressures on net income. EBIT and EBITDA margins have also seen a decline, indicating potential cost pressures.85
Very Positive
Balance Sheet
The company's debt-to-equity ratio has improved significantly, standing at 0.31 in the TTM compared to 1.82 in 2023, indicating better leverage management. Return on Equity (ROE) is 12.01% for the TTM, showing healthy returns but a decline from 16.10% in the previous year. The equity ratio remains stable at around 28.88%, reflecting a balanced asset financing approach. Overall, the balance sheet shows improved financial stability, although ROE has decreased.75
Positive
Cash Flow
Lithia Motors has experienced challenges in cash flow, with free cash flow remaining negative in the TTM at -293 million USD, although slightly improved from -702.6 million USD in 2023. The operating cash flow to net income ratio is 0.05, highlighting issues in converting income to cash. However, the company has managed to improve operating cash flow compared to the significant negative figure last year. The cash flow statement indicates room for improvement in managing operational cash generation.65
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 36.19B | 31.04B | 28.23B | 22.83B | 13.12B | Gross Profit |
| 5.56B | 5.18B | 5.15B | 4.26B | 2.23B | EBIT |
| 1.58B | 1.69B | 1.94B | 1.67B | 697.10M | EBITDA |
| 2.20B | 1.98B | 2.12B | 1.78B | 877.20M | Net Income Common Stockholders |
| 802.00M | 1.00B | 1.25B | 1.06B | 470.30M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 402.20M | 941.40M | 246.70M | 174.80M | 160.20M | Total Assets |
| 23.13B | 19.63B | 15.01B | 11.15B | 7.90B | Total Debt |
| 7.74B | 11.33B | 7.63B | 4.38B | 3.86B | Net Debt |
| 7.34B | 10.39B | 7.38B | 4.20B | 3.70B | Total Liabilities |
| 16.45B | 13.35B | 9.76B | 6.48B | 5.24B | Stockholders Equity |
| 6.66B | 6.21B | 5.25B | 4.66B | 2.66B |
| Cash Flow | Free Cash Flow | |||
| 73.70M | -702.60M | -913.20M | 1.54B | 374.40M | Operating Cash Flow |
| 425.10M | -472.40M | -610.10M | 1.80B | 542.20M | Investing Cash Flow |
| -1.85B | -1.27B | -1.33B | -2.89B | -1.61B | Financing Cash Flow |
| 907.60M | 2.41B | 2.04B | 1.22B | 1.14B |
Lithia Motors Technical Analysis
Negative
304.96
Price Trends
356.85
Negative
356.99
Negative
315.33
Negative
Market Momentum
-12.34
Positive
23.40
Positive
10.34
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 304.96 is below the 20-day moving average (MA) of 354.77, below the 50-day MA of 356.85, and below the 200-day MA of 315.33, indicating a bearish trend. The MACD of -12.34 indicates Positive momentum. The RSI at 23.40 is Positive, neither overbought nor oversold. The STOCH value of 10.34 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LAD.
Lithia Motors Risk Analysis
Lithia Motors disclosed 24 risk factors in its most recent earnings report. Lithia Motors reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Lithia Motors Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $11.03B | 12.03 | 18.50% | 2.69% | 3.14% | -11.22% | |
74 Outperform | $5.90B | 12.09 | 17.23% | 0.42% | 11.53% | -13.75% | |
73 Outperform | $8.33B | 10.71 | 12.47% | 0.66% | 16.75% | -18.09% | |
70 Outperform | $12.17B | 26.35 | 7.52% | ― | -2.46% | -6.19% | |
68 Neutral | $2.27B | 10.92 | 22.11% | 1.85% | -1.03% | 24.64% | |
63 Neutral | $6.81B | 10.14 | 29.65% | ― | -0.68% | -25.24% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% |
* Consumer Cyclical Sector Average
Performance Comparison
LAD
Lithia Motors
304.96
23.73
8.44%
AN
AutoNation
171.07
22.69
15.29%
KMX
CarMax
76.72
-4.41
-5.44%
GPI
Group 1 Automotive
441.25
178.25
67.78%
PAG
Penske Automotive Group
169.20
21.03
14.19%
SAH
Sonic Automotive
66.66
15.60
30.55%
Lithia Motors Earnings Call Summary
Earnings Call Date: Feb 12, 2025 | % Change Since: -17.14% | Next Earnings Date: Apr 16, 2025
Earnings Call Sentiment Neutral
The earnings call presented a company performing strongly in terms of revenue growth and cost management, with significant improvements in financing operations and new vehicle sales. However, challenges remain in used vehicle sales and aftermarket performance. The sentiment is cautiously optimistic with a focus on future growth opportunities and market share expansion.Highlights
Record Revenue Growth
Lithia & Driveway grew revenues to a record $9.2 billion, marking a 20% increase from Q4 of last year.
SG&A Cost Management Success
The company achieved its cost savings target, realizing $200 million in annual cost savings and achieving two consecutive quarters of absolute sequential decreases in SG&A.
Strong Financing Operations Performance
Financing Operations segment, primarily driven by DFC, reported profitability of $9 million this quarter compared to a loss of $2 million in the same quarter last year, with expectations of continued profitability growth.
Omnichannel Ecosystem Success
The omnichannel ecosystem has driven substantial improvements in customer engagement and unit sales, reinforcing its effectiveness.
Increase in New Vehicle Units
New vehicle units increased 7.4% year-over-year, with particular strength in import manufacturers.
Lowlights
Decline in Used Vehicle Units
Used vehicle units were down 4.3% year-over-year, although there was strong performance in value orders.
Challenges in Aftermarket Sales
Aftersales revenues were up only 3.4%, which was below expectations and market performance, despite a 19.9% increase in warranty work gross profit.
High Acquisition Multiples
The company noted that acquisition prices remain high, which has led to a focus on share buybacks instead.
Company Guidance
During the fourth quarter of the fiscal year 2024, Lithia Motors reported strong financial results, with a notable 20% increase in revenues, reaching a record $9.2 billion. The company achieved an adjusted diluted earnings per share of $7.79, underscoring the effectiveness of its integrated mobility ecosystem. Lithia & Driveway's operational efficiencies led to the first year-over-year operating profit increase in nine quarters, as they realized their $200 million annual cost savings target. The company also saw growth in new unit sales and maintained stable total vehicle gross profit per unit (GPU). Financing Operations contributed to profitability, with a full-year profit of $15 million, driven by a $3.9 billion portfolio balance. Lithia remains focused on growth, aiming for $2 of EPS per $1 billion in revenue, and has plans to enhance customer experiences through strategic investments and partnerships, as well as potential acquisitions targeting $2 billion to $4 billion in future annual acquired revenues.Lithia Motors Corporate Events
Executive/Board ChangesShareholder Meetings
Lithia Motors Board Member David Robino Steps Down
Neutral
Mar 3, 2025
On February 27, 2025, David J. Robino informed Lithia Motors, Inc. of his decision not to stand for reelection to the Board of Directors at the 2025 Annual Meeting of Shareholders. Consequently, the Board plans to reduce its size from eight to seven members, which may impact the company’s governance structure.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.