Lithia Motors (LAD) AI Stock Analysis

• Market Cap: $7.99B
• Dividend Yield: 0.7%
• Average Volume (3M): 241.44K
• Price to Earnings (P/E): 9.7
• Beta (1Y): 1.09
• Revenue Growth: 12.96%
• EPS Growth: -6.25%
• Country: US
• Employees: 30,000
• Sector: Consumer Cyclical
• Sector Strength: 64
• Industry: Auto - Dealerships
• EPS (TTM): 10.24
• Shares Outstanding: 26,030,573
• 10 Day Avg. Volume: 340,306
• 30 Day Avg. Volume: 241,435
• PEG Ratio: 1.40
• Price to Book (P/B): 1.21
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 140.98
• Enterprise Value/Market Cap: 2.69
• Enterprise Value/Revenue: 0.68
• Enterprise Value/Gross Profit: 18.84
• Enterprise Value/Ebitda: 14.22
• 1Y Price Target: $375.63
• Price Target Upside: 22.33% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 10

• Rating: 67 Neutral
• Price Target: $334.00 ▲(8.77%Upside)

Lithia Motors' strong earnings growth and strategic focus on enhancing profitability provide a solid foundation. However, technical analysis indicates bearish momentum, which dampens the overall score. Valuation metrics suggest potential undervaluation, but low dividend yield may limit investor appeal. The company must address cash flow conversion challenges and manage debt levels to improve its financial position.

Positive Factors

Earnings Growth

Lithia Motors expects earnings per share to increase significantly, indicating a strong financial performance.

Market Expansion

Lithia Motors is expected to be the most aggressive acquirer this year, aiming to expand its market presence and achieve scale efficiencies.

Negative Factors

Core Results

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

Sales Performance

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 through multiple streams, primarily from the sale of new and used vehicles, which constitutes the largest portion of its income. The company also earns significant revenue from its finance and insurance operations, where it offers vehicle financing solutions and insurance products to customers. Additionally, Lithia Motors benefits from its service and parts segment, which provides automotive repair, maintenance services, and the sale of replacement parts. The company partners with various automobile manufacturers and financial institutions to enhance its product offerings and financing options, contributing to its revenue growth and profitability.

Lithia Motors Financial Statement Overview

Summary

Lithia Motors showcases strong revenue growth and stable profitability metrics, with improved leverage management. However, challenges remain in converting profits into cash, and the company must manage its substantial debt carefully.

Income Statement

Lithia Motors shows strong revenue growth, with a significant increase from $28.2B in 2022 to $36.8B in TTM (Trailing-Twelve-Months). Gross profit margin remains stable at around 15%, reflecting efficient cost management. However, net profit margin has slightly declined due to increased operating expenses, indicating a need for cost control. EBITDA margin is relatively healthy at 4.7%. Overall, the company demonstrates robust financial performance despite some pressure on profitability.

Balance Sheet

The company's debt-to-equity ratio has improved, dropping from 2.1 in 2023 to 1.2 in TTM, indicating better leverage management. Return on equity is stable at approximately 12.6%, showcasing efficient use of equity capital. Equity ratio stands at 28.8%, suggesting moderate financial stability. While there is an improvement in leverage, the total debt level remains high, which poses a potential risk.

Cash Flow

Lithia Motors has shown improvement in operating cash flow, with a positive $457M in TTM versus negative figures in previous periods. Free cash flow has rebounded to $57.6M, signaling better cash management. However, the operating cash flow to net income ratio is low at 0.54, indicating that not all earnings are translating into cash flow. The free cash flow to net income ratio is also low, highlighting ongoing challenges in converting revenue into cash.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	36.19B	31.04B	28.19B	22.83B	13.12B
Gross Profit	5.56B	5.18B	5.15B	4.26B	2.23B
EBITDA	1.96B	1.97B	2.12B	1.78B	877.20M
Net Income	802.00M	1.00B	1.25B	1.06B	470.30M
Balance Sheet
Total Assets	23.13B	19.63B	15.01B	11.15B	7.90B
Cash, Cash Equivalents and Short-Term Investments	402.20M	941.40M	246.70M	174.80M	160.20M
Total Debt	13.86B	11.33B	7.99B	4.96B	4.17B
Total Liabilities	16.45B	13.35B	9.76B	6.48B	5.24B
Stockholders Equity	6.66B	6.21B	5.21B	4.63B	2.66B
Cash Flow
Free Cash Flow	73.70M	-702.60M	-913.20M	1.54B	376.80M
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	1.11B	1.14B

Lithia Motors Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 307.07
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• 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 307.07 is below the 20-day moving average (MA) of 332.05, below the 50-day MA of 326.81, and below the 200-day MA of 333.77, indicating a bearish trend. The MACD of -5.91 indicates Positive momentum. The RSI at 37.67 is Neutral, neither overbought nor oversold. The STOCH value of 13.97 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	76 Outperform	$11.58B	12.34	18.57%	2.78%	3.29%	-1.29%
GPI	75 Outperform	$5.65B	12.09	15.72%	0.44%	19.75%	-10.74%
ABG	74 Outperform	$4.51B	10.91	11.92%	―	11.11%	-23.41%
AN	69 Neutral	$7.40B	12.30	27.24%	―	3.15%	-12.49%
LAD	67 Neutral	$7.99B	9.67	12.95%	0.70%	12.96%	-6.25%
SAH	67 Neutral	$2.69B	17.54	15.99%	1.77%	4.48%	-16.26%
Sector *	63 Neutral	$17.26B	10.39	-8.50%	3.06%	1.63%	-25.95%

Lithia Motors Corporate Events

Lithia Motors COO Adam Chamberlain to Resign

Adam A. Chamberlain will resign from his role as Executive Vice President, Chief Operating Officer at Lithia Motors, Inc. to become the CEO of Mercedes-Benz USA, effective June 1, 2025. Following his departure, Lithia Motors’ regional presidents and vice presidents will report directly to CEO Bryan DeBoer, indicating a shift in the company’s operational structure.