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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:67Neutral
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 (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 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 Earnings Call Summary

Earnings Call Date:Jul 29, 2025
(Q1-2025)
|
% Change Since: 4.12%|
Next Earnings Date:Oct 15, 2025
Earnings Call Sentiment Positive
The earnings call highlighted significant growth in earnings per share, record revenue, and strong performance in value auto and after-sales, while facing challenges in gross profit per unit and maintaining SG&A efficiency. The overall sentiment is positive with strong growth metrics, despite some challenges.
Q1-2025 Updates
Positive Updates
Strong Earnings Growth
Diluted earnings per share increased by 34.8% to $7.94, with adjusted diluted earnings growing by 25.4% year-over-year.
Record Revenue Achievement
Lithia Driveway achieved a record revenue of $9.2 billion, marking a 7% increase from Q1 of last year.
Value Auto Sales Surge
Value auto sales experienced a significant 38.8% improvement from the previous year.
After-Sales and Warranty Success
After-sales gross profit increased by 7.5%, with warranty work gross profits increasing by 19.7% year-over-year.
Finance Operations Profitability
Driveway Finance Corporation delivered profitability with income of $12.5 million compared to a loss last year.
Inventory Optimization
New vehicle days sales outstanding decreased from 59 to 43 days, and used vehicle DSOs decreased from 53 to 45 days.
Negative Updates
Gross Profit Per Unit Decline
Total gross profit per unit decreased by $144 compared to the same period last year.
Challenges in Maintaining SG&A
SG&A as a percentage of gross profit was at 68.2%, a decrease, but still challenging to manage.
Sequential GPU Decline in Used Vehicles
Used vehicles gross profit per unit was down at $1,769, below guidance expectations.
Company Guidance
In Lithia Motors' first quarter 2025 earnings call, the company reported strong financial performance, achieving a diluted earnings per share (EPS) of $7.94, representing a 34.8% year-over-year increase, and an adjusted diluted EPS of $7.66, a 25.4% rise. Revenues reached a record $9.2 billion, marking a 7% increase from the same period last year. The company highlighted its strategic focus on integrating its omnichannel ecosystem to enhance customer engagement and profitability. Lithia Motors also reported a 2.5% increase in same-store sales and a 1.8% rise in gross profit, despite a slight decline in gross profit per unit. The auto retailer emphasized its commitment to achieving $2 in EPS per $1 billion in revenue and maintaining a disciplined approach to capital allocation, with $146 million spent on share repurchases in the first quarter. Lithia Motors remains confident in its ability to capture market share and drive sustainable growth through strategic acquisitions and operational efficiencies.

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
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.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue36.19B31.04B28.19B22.83B13.12B
Gross Profit5.56B5.18B5.15B4.26B2.23B
EBITDA1.96B1.97B2.12B1.78B877.20M
Net Income802.00M1.00B1.25B1.06B470.30M
Balance Sheet
Total Assets23.13B19.63B15.01B11.15B7.90B
Cash, Cash Equivalents and Short-Term Investments402.20M941.40M246.70M174.80M160.20M
Total Debt13.86B11.33B7.99B4.96B4.17B
Total Liabilities16.45B13.35B9.76B6.48B5.24B
Stockholders Equity6.66B6.21B5.21B4.63B2.66B
Cash Flow
Free Cash Flow73.70M-702.60M-913.20M1.54B376.80M
Operating Cash Flow425.10M-472.40M-610.10M1.80B542.20M
Investing Cash Flow-1.85B-1.27B-1.33B-2.89B-1.61B
Financing Cash Flow907.60M2.41B2.04B1.11B1.14B

Lithia Motors Technical Analysis

Technical Analysis Sentiment
Negative
Last Price307.07
Price Trends
50DMA
326.81
Negative
100DMA
311.99
Negative
200DMA
333.77
Negative
Market Momentum
MACD
-5.91
Positive
RSI
37.67
Neutral
STOCH
13.97
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 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 (63)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
76
Outperform
$11.58B12.3418.57%2.78%3.29%-1.29%
75
Outperform
$5.65B12.0915.72%0.44%19.75%-10.74%
74
Outperform
$4.51B10.9111.92%11.11%-23.41%
69
Neutral
$7.40B12.3027.24%3.15%-12.49%
67
Neutral
$7.99B9.6712.95%0.70%12.96%-6.25%
67
Neutral
$2.69B17.5415.99%1.77%4.48%-16.26%
63
Neutral
$17.26B10.39-8.50%3.06%1.63%-25.95%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
LAD
Lithia Motors
307.07
42.19
15.93%
ABG
Asbury
229.20
-27.99
-10.88%
AN
AutoNation
196.26
16.85
9.39%
GPI
Group 1 Automotive
425.54
77.70
22.34%
PAG
Penske Automotive Group
170.25
10.13
6.33%
SAH
Sonic Automotive
76.36
20.08
35.68%

Lithia Motors Corporate Events

Executive/Board ChangesBusiness Operations and Strategy
Lithia Motors COO Adam Chamberlain to Resign
Neutral
Apr 15, 2025

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.

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: Jul 18, 2025