Lithia Motors (LAD) AI Stock Analysis

• Market Cap: $8.11B
• Dividend Yield: 0.69%
• Average Volume (3M): 327.48K
• Price to Earnings (P/E): 9.8
• Beta (1Y): 1.09
• Revenue Growth: 12.96%
• EPS Growth: -6.25%
• Country: US
• Employees: 30,000
• Sector: Consumer Cyclical
• Sector Strength: 76
• Industry: Auto - Dealerships
• EPS (TTM): 7.66
• Shares Outstanding: 26,030,573
• 10 Day Avg. Volume: 266,953
• 30 Day Avg. Volume: 327,479
• PEG Ratio: 1.37
• Price to Book (P/B): 1.19
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 138.13
• Enterprise Value/Market Cap: 2.64
• Enterprise Value/Revenue: 0.15
• Enterprise Value/Gross Profit: 3.80
• Enterprise Value/Ebitda: 2.71
• 1Y Price Target: $371.44
• Price Target Upside: 19.26% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 9

• Rating: 75 Outperform
• Price Target: $344.00 ▲( 10.45% Upside)

Lithia Motors demonstrates strong financial performance and positive earnings call sentiment, contributing significantly to its score. Technical analysis shows mild bullish momentum. Despite valuation indicating reasonable pricing, challenges in cash conversion and debt management temper the overall outlook.

Positive Factors

Cost Management

Executing on inventory and personnel cost reductions with a 120bps decline in SG&A y/y – the first y/y decline since 2022 – and identifying further cost-cutting opportunities.

Financial Performance

The company should generate about $1 billion surplus cash annually, enabling growth investment and cash returns to shareholders.

Revenue Diversification

Recent diversification into the UK, which accounts for approximately 20% of sales, could offset tariff-driven volatility in the US market.

Negative Factors

Macroeconomic Concerns

No stated change in M&A opportunities at this stage, with concerns about policy uncertainty and a potentially weaker consumer in the second half.

Quarterly Performance

Relatively in-line/slight miss in quarter results, with new units surprising to the downside, somewhat dampening excitement around the magnitude of the auto demand pull-forward seen YTD.

Tariff Impact

Tariffs may result in reduced demand due to affordability challenges and the possibility of a broader recession.

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 is experiencing strong revenue growth and stable profitability metrics, with significant improvements in leverage. While the cash flow situation has improved, there are still challenges in converting profits into cash. The balance sheet reflects substantial debt, which necessitates careful management to maintain financial health. Overall, the company is on a positive trajectory, but must remain vigilant regarding cost control and cash generation.

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
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
36.80B	36.19B	31.04B	28.23B	22.83B	13.12B
	Gross Profit
5.64B	5.56B	5.18B	5.15B	4.26B	2.23B
	EBIT
1.64B	1.58B	1.69B	1.94B	1.67B	697.10M
	EBITDA
2.09B	1.96B	1.98B	2.12B	1.78B	877.20M
	Net Income Common Stockholders
849.00M	802.00M	1.00B	1.25B	1.06B	470.30M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
404.60M	402.20M	941.40M	246.70M	174.80M	160.20M
	Total Assets
22.18B	23.13B	19.63B	15.01B	11.15B	7.90B
	Total Debt
13.21B	13.86B	11.33B	7.63B	4.38B	3.86B
	Net Debt
12.80B	13.46B	10.39B	7.38B	4.20B	3.70B
	Total Liabilities
15.76B	16.45B	13.35B	9.76B	6.48B	5.24B
	Stockholders Equity
6.35B	6.66B	6.21B	5.25B	4.66B	2.66B
Cash Flow		Free Cash Flow
57.60M	73.70M	-702.60M	-913.20M	1.54B	374.40M
	Operating Cash Flow
457.50M	425.10M	-472.40M	-610.10M	1.80B	542.20M
	Investing Cash Flow
-705.60M	-1.85B	-1.27B	-1.33B	-2.89B	-1.61B
	Financing Cash Flow
230.20M	907.60M	2.41B	2.04B	1.22B	1.14B

Lithia Motors Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 311.45
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LAD, the sentiment is Neutral. The current price of 311.45 is above the 20-day moving average (MA) of 307.12, above the 50-day MA of 299.40, and below the 200-day MA of 325.64, indicating a neutral trend. The MACD of 4.67 indicates Positive momentum. The RSI at 53.42 is Neutral, neither overbought nor oversold. The STOCH value of 21.04 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for LAD.

Lithia Motors Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PAG	77 Outperform	$10.73B	11.43	18.57%	2.73%	3.29%	-1.29%
GPI	76 Outperform	$5.52B	12.02	16.25%	0.45%	15.13%	-15.98%
LAD	75 Outperform	$8.11B	9.81	12.95%	0.69%	12.96%	-6.25%
ABG	72 Outperform	$4.43B	10.72	11.92%	―	11.11%	-23.41%
AN	72 Outperform	$6.87B	10.78	28.45%	―	-0.24%	-19.76%
SAH	68 Neutral	$2.28B	9.58	24.52%	1.93%	1.59%	43.91%
Sector *	62 Neutral	$6.84B	11.22	2.83%	3.93%	2.65%	-21.93%

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.

Lithia Motors Board Member David Robino Steps Down

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.