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Lithia Motors
(NYSE:LAD)
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Rating:66Neutral
Price Target:
$401.00
▲(17.61% Upside)
Action:Reiterated
Date:08/06/26
The score is held back primarily by weaker financial quality—especially negative TTM operating/free cash flow alongside elevated leverage and margin compression. Offsetting this, the stock’s technical setup is strong (price above major moving averages with positive momentum), valuation looks reasonable on P/E, and the latest earnings call conveyed constructive guidance and execution progress (cost reduction, DFC scaling, and shareholder returns).
Positive Factors
Aftersales Margin Strength
Aftersales is a recurring, high‑margin business tied to the installed vehicle base. Contributing 42.2% of gross profit with margins up 120 bps provides durable margin and cash‑flow support versus cyclical new‑vehicle sales, stabilizing earnings over the next several quarters.
Negative Factors
Elevated Leverage
Debt at roughly 2.5x equity raises interest‑rate and refinancing sensitivity for a cyclical retailer. Elevated leverage limits strategic flexibility for M&A or buybacks if cash flow weakens and increases default/coverage risk during downturns over the next several quarters.
Read all positive and negative factors
Positive Factors
Negative Factors
Aftersales Margin Strength
Aftersales is a recurring, high‑margin business tied to the installed vehicle base. Contributing 42.2% of gross profit with margins up 120 bps provides durable margin and cash‑flow support versus cyclical new‑vehicle sales, stabilizing earnings over the next several quarters.
Read all positive factors
Lithia Motors (LAD) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$8.47B
Dividend Yield0.58%
Average Volume (3M)284.06K
Price to Earnings (P/E)12.7
Beta (1Y)0.98
Revenue Growth1.97%
EPS Growth-10.60%
CountryUS
Employees30,000
SectorConsumer Cyclical
Sector Strength84
IndustryAuto - Dealerships
Share Statistics
EPS (TTM)30.30
Shares Outstanding21,983,116
10 Day Avg. Volume277,675
30 Day Avg. Volume284,058
Financial Highlights & Ratios
PEG Ratio1.14
Price to Book (P/B)1.27
Price to Sales (P/S)0.22
P/FCF Ratio1.45K
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$415.54Price Target Upside21.88% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering13
EPS Forecast (FY)35.54
Revenue Forecast (FY)$38.33B
Lithia Motors Business Overview & Revenue Model
Company Description
Lithia Motors, Inc. operates as a prominent automotive retail enterprise throughout the United States. Its business is strategically divided into three key segments: Domestic, Import, and Luxury vehicle sales. The company's comprehensive offerings...
How the Company Makes Money
Lithia Motors generates revenue primarily through automotive retailing and related dealership services. Its key revenue streams include: (1) New vehicle sales: Lithia sells new vehicles through franchised dealerships (with OEM franchise agreements...
Lithia Motors Earnings Call Summary
Earnings Call Date:Jul 29, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Oct 28, 2026
Earnings Call Sentiment Positive
The call highlighted multiple meaningful positives: record revenue and EPS, substantial sequential and YoY improvements in vehicle GPUs (notably used), strong aftersales margins, rapid scaling and profitability of Driveway Finance Corporation, significant cash generation and shareholder returns, and tangible SG&A progress driven by AI and operational changes (with UK performance validating the technology pathway). Lowlights were largely manageable: modest declines in same-store revenue and gross profit versus an unusually strong prior-year quarter, slight new vehicle volume pressure, and SG&A still above the company’s long-term target. Overall, the positive operational momentum, financial outcomes and clear execution plan outweigh the transitory headwinds and remaining work to reach longer-term SG&A goals.Positive Updates
Record Revenue and Earnings
Revenue of $9.8 billion and adjusted diluted EPS of $10.03, up 9% year-over-year, marking another record quarter for Lithia & Driveway.
Negative Updates
Same-Store Revenue and Gross Profit Pressure vs Tough Comp
Same-store revenues declined 1.6% and total gross profit declined 2.7% year-over-year, with management noting these results were versus an exceptionally strong Q2 2025 comparable period (tariff pull-forward).
Read all updates
Q2-2026 Updates
Positive
Negative
Record Revenue and Earnings
Revenue of $9.8 billion and adjusted diluted EPS of $10.03, up 9% year-over-year, marking another record quarter for Lithia & Driveway.
Read all positive updates
Company Guidance
Management said momentum should continue into H2 with explicit targets and near‑term expectations: long‑term earnings leverage of $2 of EPS per $1B of revenue, a sub‑60% SG&A target (adjusted SG&A was 68.6% this quarter, down 290 bps sequentially from Q1 with personnel costs improving ~30 bps), and DFC penetration targeted at 20%+ (North American penetration at 18% this quarter). Key operating and financials cited as context and guidance drivers include revenue of $9.8B, adjusted diluted EPS $10.03 (+9% YoY), same‑store revenues -1.6% and total gross profit -2.7%, total vehicle GPU $4,119 (up ~$200 sequentially) with new GPU $2,718 (stable) and used GPU $2,019 (up $339 sequentially), used GP +1.2% and aftersales GP +3.1% with aftersales margin 59.2% (+120 bps YoY). DFC guidance/trajectory: record originations $884M, financing operations income $37M, NIM 4.8% (+20 bps YoY), managed receivables >$5B, avg origination FICO 748 and front‑end LTV 96%, and expectations that margins and penetration will keep building. Capital allocation guidance remains opportunistic: repurchases are top priority (Q2 buybacks $242M, ~4% of shares retired; share count down ~17% YoY; avg repurchase price $284), dividend raised 23% to $0.70, H1 acquisitions added $765M revenue (divestitures $120M), M&A buy price targets 15–30% of revenue or 3–6x normalized EBITDA (historical returns >25% vs 15% hurdle), and a stated plan to balance ~1/3 buybacks, ~1/3 M&A and the remainder for dividends/internal investment.Lithia Motors Financial Statement Overview
Summary
Income Statement
63
Positive
Balance Sheet
54
Neutral
Cash Flow
33
Negative
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 37.94B | 37.63B | 36.19B | 31.04B | 28.19B | 22.83B |
| Gross Profit | 4.19B | 5.73B | 5.56B | 5.23B | 5.15B | 4.26B |
| EBITDA | 1.41B | 2.30B | 2.26B | 2.16B | 2.19B | 1.78B |
| Net Income | 714.40M | 819.60M | 802.00M | 1.00B | 1.25B | 1.06B |
Balance Sheet | ||||||
| Total Assets | 26.25B | 25.11B | 23.13B | 19.63B | 15.01B | 11.15B |
| Cash, Cash Equivalents and Short-Term Investments | 363.90M | 341.80M | 402.20M | 941.40M | 246.70M | 174.80M |
| Total Debt | 9.22B | 14.69B | 13.86B | 11.33B | 7.99B | 4.96B |
| Total Liabilities | 19.82B | 18.48B | 16.45B | 13.35B | 9.76B | 6.48B |
| Stockholders Equity | 6.43B | 6.60B | 6.66B | 6.21B | 5.21B | 4.63B |
Cash Flow | ||||||
| Free Cash Flow | -504.30M | 5.80M | 73.70M | -702.60M | -913.20M | 1.54B |
| Operating Cash Flow | -148.80M | 356.70M | 425.10M | -472.40M | -610.10M | 1.80B |
| Investing Cash Flow | -1.06B | -1.03B | -1.85B | -1.27B | -1.33B | -2.89B |
| Financing Cash Flow | 1.18B | 612.10M | 907.60M | 2.41B | 2.04B | 1.11B |
Lithia Motors Technical Analysis
Positive
340.95
Price Trends
316.54
Positive
292.46
Positive
303.14
Positive
Market Momentum
21.28
Negative
59.30
Neutral
45.19
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 340.95 is below the 20-day moving average (MA) of 345.66, above the 50-day MA of 316.54, and above the 200-day MA of 303.14, indicating a bullish trend. The MACD of 21.28 indicates Negative momentum. The RSI at 59.30 is Neutral, neither overbought nor oversold. The STOCH value of 45.19 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LAD.
Lithia Motors Risk Analysis
Lithia Motors disclosed 31 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
69 Neutral | $7.11B | 9.80 | 33.18% | ― | -0.06% | 35.87% | |
66 Neutral | $8.47B | 12.72 | 7.00% | 0.65% | 1.97% | -10.60% | |
66 Neutral | $14.27B | 16.00 | 16.43% | 2.54% | 4.13% | -5.43% | |
65 Neutral | $4.31B | 8.65 | 13.04% | ― | 4.12% | -2.47% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
60 Neutral | $8.13B | 35.57 | 3.67% | ― | -1.69% | -58.01% | |
52 Neutral | $3.42B | 11.92 | 9.96% | 0.63% | 0.81% | -33.60% |
* Consumer Cyclical Sector Average
LAD
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Lithia Motors Corporate Events
Business Operations and StrategyStock BuybackDividendsFinancial DisclosuresM&A Transactions
Lithia Motors Reports Record Q2 Revenue and Earnings
Positive
Jul 29, 2026
On July 29, 2026, Lithia Driveway reported second quarter 2026 results showing record revenue of $9.8 billion, a 2% year-over-year increase, with diluted earnings per share rising 17% to $11.54 and adjusted diluted EPS up 9% to $10.03. Despite ad...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.