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Lithia Motors (LAD)
NYSE:LAD
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Lithia Motors (LAD) AI Stock Analysis

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LAD

Lithia Motors

(NYSE:LAD)

Rating:75Outperform
Price Target:
$354.00
▲(17.65% Upside)
Lithia Motors' strong financial performance, strategic corporate events, and positive earnings call sentiment drive a solid stock score. However, technical analysis indicates potential bearish momentum, and challenges in cash conversion and debt management slightly temper the overall outlook.
Positive Factors
Earnings
LAD reported 2Q25 earnings that beat expectations and was the highest second quarter in its history.
Financial Performance
The expected share price return is projected to be 34.6%.
Market Strategy
Lithia Motors is expected to be the most aggressive acquirer this year, aiming to expand its market presence and achieve scale efficiencies.
Negative Factors
Earnings Quality
LAD’s 2Q preliminary EPS range represents a low-quality beat, with relatively underwhelming read across for the broader sector.
Sales Performance
The reduction in sales estimates suggests a softening demand for new vehicles, impacting overall sales performance.

Lithia Motors (LAD) vs. SPDR S&P 500 ETF (SPY)

Lithia Motors Business Overview & Revenue Model

Company DescriptionLithia 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 MoneyLithia 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 Earnings Call Summary

Earnings Call Date:Jul 29, 2025
(Q2-2025)
|
% Change Since: -1.83%|
Next Earnings Date:Oct 15, 2025
Earnings Call Sentiment Positive
Lithia & Driveway's Q2 2025 earnings call highlighted strong revenue and EPS growth, driven by impressive performance in aftersales and financing operations. While the company is effectively deploying capital through share buybacks and acquisitions, challenges remain with declining vehicle gross profit, higher SG&A costs, and ongoing issues in the U.K. market. Despite these challenges, the overall sentiment remains positive due to the company's robust growth and strategic initiatives.
Q2-2025 Updates
Positive Updates
Record Revenue and EPS Growth
Lithia & Driveway achieved a record revenue of $9.6 billion in Q2 2025, with a 4% year-over-year same-store revenue increase. The company also reported a 29% increase in EPS year-over-year, with diluted earnings per share for the quarter at $9.87 and $10.24 on an adjusted basis, marking an increase of 25% and 30% year-over-year, respectively.
Strong Performance in Aftersales and Financing Operations
Aftersales gross profit grew 8.5% year-over-year, with a gross profit margin widening to 57.8%. Financing operations income more than doubled year-over-year from $7 million to $20 million, supported by a 50 basis point expansion in net interest margin to 4.6%.
Successful Capital Deployment and Share Buybacks
In H1 2025, Lithia & Driveway repurchased 3% of its outstanding shares. The company is targeting up to 50% of free cash flow for share buybacks, capitalizing on the meaningful disconnect between stock price and intrinsic value.
Negative Updates
Decline in Vehicle Gross Profit
Total vehicle gross profit of $4,318 was down $128 compared to the same period last year. New vehicle units increased 2% year-over-year, but front-end GPUs for used vehicles were flat year-over-year at $1,900.
Higher SG&A Costs
Despite operational improvements, SG&A costs as a percentage of gross profit have ticked up to 67.4% from 66.4% on a same-store basis, reflecting cost pressures as the company navigates declining front-end GPUs.
Challenges in U.K. Market
The U.K. market continues to pose challenges with higher SG&A costs. Although profitability increased by about 3% year-over-year, there are ongoing industry challenges, including changing EV mandates.
Company Guidance
In the second quarter of 2025, Lithia & Driveway reported significant financial growth, with a 29% increase in EPS year-over-year and record revenue of $9.6 billion, alongside a 4% same-store revenue increase. Diluted earnings per share were up 25% to $9.87, and an adjusted EPS rose by 30% to $10.24. The company achieved record profitability in financing operations and expanded aftersales margins while maintaining flat SG&A costs despite lower GPUs. Aftersales contributed over 60% of the net profit, with same-store aftersales gross profit growing by 8.5% year-over-year, and gross profit margins widening to 57.8%. The company's financing operations delivered a 4.5% year-over-year growth in same-store sales gross profit, with a $1,841 per unit basis, reflecting a $25 increase from the previous year. The company leveraged its omnichannel platform to expand customer engagement and drive margin improvements, while strategic acquisitions and an increase in share buybacks also contributed to its growth strategy.

Lithia Motors Financial Statement Overview

Summary
Lithia Motors demonstrates strong revenue growth and stable profitability metrics, with significant improvements in leverage. However, challenges remain in converting profits into cash, and the balance sheet reflects substantial debt.
Income Statement
83
Very Positive
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
75
Positive
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
68
Positive
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue37.16B36.19B31.04B28.19B22.83B13.12B
Gross Profit5.70B5.56B5.18B5.15B4.26B2.23B
EBITDA1.65B1.96B1.97B2.12B1.78B877.20M
Net Income1.23B802.00M1.00B1.25B1.06B470.30M
Balance Sheet
Total Assets24.16B23.13B19.63B15.01B11.15B7.90B
Cash, Cash Equivalents and Short-Term Investments404.40M402.20M941.40M246.70M174.80M162.50M
Total Debt14.30B13.86B11.33B7.99B4.96B4.17B
Total Liabilities17.15B16.45B13.35B9.76B6.48B5.24B
Stockholders Equity6.99B6.66B6.21B5.21B4.63B2.66B
Cash Flow
Free Cash Flow392.80M73.70M-702.60M-913.20M1.54B376.80M
Operating Cash Flow603.20M425.10M-472.40M-610.10M1.80B542.20M
Investing Cash Flow-456.40M-1.85B-1.27B-1.33B-2.89B-1.61B
Financing Cash Flow-383.00M907.60M2.41B2.04B1.11B1.14B

Lithia Motors Technical Analysis

Technical Analysis Sentiment
Negative
Last Price300.88
Price Trends
50DMA
320.52
Negative
100DMA
310.48
Negative
200DMA
331.99
Negative
Market Momentum
MACD
-5.27
Negative
RSI
46.14
Neutral
STOCH
74.91
Neutral
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 300.88 is above the 20-day moving average (MA) of 299.94, below the 50-day MA of 320.52, and below the 200-day MA of 331.99, indicating a neutral trend. The MACD of -5.27 indicates Negative momentum. The RSI at 46.14 is Neutral, neither overbought nor oversold. The STOCH value of 74.91 is Neutral, 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 29 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 (67)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
77
Outperform
$11.91B12.5618.11%2.77%2.39%5.84%
76
Outperform
$5.73B12.2615.72%0.44%19.75%-10.74%
76
Outperform
$4.73B8.7915.19%8.39%40.35%
75
Outperform
$7.71B8.9113.34%0.72%10.25%9.08%
69
Neutral
$7.77B12.9227.24%3.15%-12.49%
67
Neutral
¥279.70B15.116.81%2.50%5.05%-21.29%
66
Neutral
$2.70B17.5615.99%1.71%4.48%-16.26%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
LAD
Lithia Motors
300.88
16.48
5.79%
ABG
Asbury
240.55
10.52
4.57%
AN
AutoNation
206.18
32.10
18.44%
GPI
Group 1 Automotive
442.52
89.33
25.29%
PAG
Penske Automotive Group
180.35
20.29
12.68%
SAH
Sonic Automotive
78.92
19.16
32.06%

Lithia Motors Corporate Events

Private Placements and FinancingBusiness Operations and Strategy
Lithia Motors Expands Loan Agreement by $500 Million
Positive
Aug 8, 2025

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.

The most recent analyst rating on (LAD) stock is a Buy with a $410.00 price target. To see the full list of analyst forecasts on Lithia Motors stock, see the LAD Stock Forecast page.

DividendsBusiness Operations and StrategyFinancial Disclosures
Lithia Motors Announces Cash Dividend Amid Revenue Growth
Positive
Jul 29, 2025

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.

The most recent analyst rating on (LAD) stock is a Buy with a $330.00 price target. To see the full list of analyst forecasts on Lithia Motors stock, see the LAD Stock Forecast page.

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.Date of analysis: Aug 14, 2025