Lithia Motors (LAD) AI Stock Analysis

• Market Cap: $8.74B
• Dividend Yield: 0.63%
• Average Volume (3M): 345.67K
• Price to Earnings (P/E): 10.1
• Beta (1Y): 1.10
• Revenue Growth: 10.25%
• EPS Growth: 9.08%
• Country: US
• Employees: 30,000
• Sector: Consumer Cyclical
• Sector Strength: 83
• Industry: Auto - Dealerships
• EPS (TTM): 10.24
• Shares Outstanding: 25,636,452
• 10 Day Avg. Volume: 295,889
• 30 Day Avg. Volume: 345,674
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 2.59
• Enterprise Value/Revenue: 0.61
• Enterprise Value/Gross Profit: 3.98
• Enterprise Value/Ebitda: 9.69
• 1Y Price Target: $375.00
• Price Target Upside: 9.95% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 10

• Rating: 73 Outperform
• Price Target: $343.00 ▲(0.57% Upside)

Lithia Motors' overall stock score is driven by strong earnings growth and strategic corporate actions, despite challenges in technical indicators and financial leverage. The company's attractive valuation and positive earnings call sentiment further support the score.

Positive Factors

Earnings Growth

LAD reported 2Q25 earnings that beat expectations and was the highest second quarter in its history.

Financial Strategy

Management is reinvesting across organic growth, M&A, and buybacks, with a balanced capital allocation strategy, indicating long-term value creation.

Stock Buyback

Lithia Motors repurchased $629 million of stock in the last 18 months, with expectations for this pace to continue.

Negative Factors

Core Results

Core results were weaker than expected, with same-store revenue growth softer than anticipated.

Sales Estimates

The reduction in sales estimates suggests a softening demand for new vehicles, impacting overall sales performance.

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 primarily through the sale of new and used vehicles. The company earns income from the profit margin on these vehicle sales, which includes both the markup on the vehicles themselves and any additional services offered, such as vehicle financing and warranties. In addition, Lithia Motors has significant revenue streams from after-sales services, including vehicle maintenance, repairs, and parts sales. The company also benefits from finance and insurance (F&I) products, where it receives commissions for arranging financing and selling insurance products to customers. Partnerships with various automotive manufacturers and financial institutions also enhance Lithia's revenue, as they allow the company to offer competitive financing options and exclusive vehicle inventory, boosting sales and profitability.

Lithia Motors Financial Statement Overview

Summary

Lithia Motors demonstrates strong revenue growth and improved cash flow generation, but faces challenges with declining profit margins and high leverage. The company's financial health is stable, but attention to profitability and debt management is crucial for sustained growth.

Income Statement

Lithia Motors shows strong revenue growth with a TTM increase of 95.4%, indicating robust expansion. However, margins are under pressure, with a declining gross profit margin from 18.65% in 2021 to 15.33% in TTM. Net profit margin is relatively low at 2.40% TTM, suggesting profitability challenges despite revenue growth.

Balance Sheet

The company has a high debt-to-equity ratio of 2.05 TTM, indicating significant leverage, which could pose financial risks. Return on equity is moderate at 13.20% TTM, reflecting decent profitability relative to equity. The equity ratio is stable, but the high leverage remains a concern.

Cash Flow

Free cash flow has improved significantly with a growth rate of 453.65% TTM, showing enhanced cash generation. However, the operating cash flow to net income ratio is low at 0.09, indicating potential cash flow challenges. The free cash flow to net income ratio is healthy at 0.52, reflecting better cash conversion.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	37.16B	36.19B	31.04B	28.19B	22.83B	13.13B
Gross Profit	5.70B	5.56B	5.23B	5.15B	4.26B	2.22B
EBITDA	2.34B	2.26B	2.16B	2.19B	1.78B	875.80M
Net Income	890.90M	802.00M	1.00B	1.25B	1.06B	470.30M
Balance Sheet
Total Assets	24.16B	23.13B	19.63B	15.01B	11.15B	7.90B
Cash, Cash Equivalents and Short-Term Investments	404.40M	402.20M	941.40M	246.70M	174.80M	162.50M
Total Debt	14.30B	13.86B	11.33B	7.99B	4.96B	4.17B
Total Liabilities	17.15B	16.45B	13.35B	9.76B	6.48B	5.24B
Stockholders Equity	6.99B	6.66B	6.21B	5.21B	4.63B	2.66B
Cash Flow
Free Cash Flow	318.90M	73.70M	-702.60M	-913.20M	1.54B	376.80M
Operating Cash Flow	609.40M	425.10M	-472.40M	-610.10M	1.80B	542.20M
Investing Cash Flow	-654.80M	-1.85B	-1.27B	-1.33B	-2.89B	-1.61B
Financing Cash Flow	-220.40M	907.60M	2.41B	2.04B	1.11B	1.14B

Lithia Motors Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 341.07
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LAD, the sentiment is Positive. The current price of 341.07 is above the 20-day moving average (MA) of 318.94, above the 50-day MA of 319.81, and above the 200-day MA of 330.01, indicating a bullish trend. The MACD of 8.05 indicates Negative momentum. The RSI at 64.98 is Neutral, neither overbought nor oversold. The STOCH value of 78.28 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LAD.

Lithia Motors Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PAG	80 Outperform	$12.39B	13.07	18.11%	2.66%	2.39%	5.84%
ABG	75 Outperform	$5.06B	9.40	15.19%	―	8.39%	40.35%
GPI	75 Outperform	$6.26B	13.40	15.72%	0.41%	19.75%	-10.74%
LAD	73 Outperform	$8.74B	10.10	13.34%	0.63%	10.25%	9.08%
KMX	71 Outperform	$9.11B	16.79	8.97%	―	3.17%	42.14%
AN	70 Outperform	$8.55B	14.21	27.24%	―	3.15%	-12.49%
Sector *	61 Neutral	$17.92B	12.81	-3.11%	2.97%	1.30%	-14.28%

Lithia Motors Corporate Events

Lithia Motors Announces $600M Senior Notes Offering

On September 3, 2025, Lithia Motors announced the pricing of its $600 million private offering of 5.500% senior notes due 2030, an increase of $100 million from the initial offering size. The proceeds will be used to repay part of its revolving credit borrowings, potentially impacting its financial flexibility and acquisition strategy.

Lithia Motors Announces $500 Million Senior Notes Offering

On September 3, 2025, Lithia Motors announced a private offering of $500 million in senior notes due 2030. The proceeds will be used to repay part of its revolving credit borrowings, which may be reborrowed for corporate purposes, including acquisitions and working capital. This strategic financial move is expected to impact the company’s operational flexibility and market positioning.

Lithia Motors Expands Loan Agreement by $500 Million

On August 6, 2025, Lithia Motors, Inc. announced a Sixth Amendment to its Fourth Amended and Restated Loan Agreement, increasing its total financing commitment from $6.0 billion to $6.5 billion, with potential expansion to $7.0 billion. This amendment includes changes such as reallocating commitments under the Credit Facility and removing Financing Operations interest expense from the fixed charge coverage ratio, which could enhance the company’s operational flexibility and financial strategy.

Lithia Motors Announces Cash Dividend Amid Revenue Growth

On July 29, 2025, Lithia Motors announced a $0.55 per share cash dividend to be paid on August 22, 2025, following a record second quarter revenue of $9.6 billion, marking a 4% increase from the previous year. The company also reported a 25% increase in diluted earnings per share, driven by operational excellence and strategic acquisitions, positioning itself for accelerated growth in the latter half of 2025.