Lithia Motors (LAD) AI Stock Analysis

• Market Cap: $9.01B
• Dividend Yield: 0.62%
• Average Volume (3M): 224.92K
• Price to Earnings (P/E): 10.9
• Beta (1Y): 1.06
• Revenue Growth: 12.96%
• EPS Growth: -6.25%
• Country: US
• Employees: 30,000
• Sector: Consumer Cyclical
• Sector Strength: 61
• Industry: Auto - Dealerships
• EPS (TTM): 7.66
• Shares Outstanding: 26,030,573
• 10 Day Avg. Volume: 221,737
• 30 Day Avg. Volume: 224,923
• PEG Ratio: 0.23
• Price to Book (P/B): 1.10
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -6.32
• Enterprise Value/Market Cap: 1.46
• Enterprise Value/Revenue: 0.09
• Enterprise Value/Gross Profit: 2.33
• Enterprise Value/Ebitda: 1.66
• 1Y Price Target: $376.00
• Price Target Upside: 8.60% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 10

• Rating: 61 Neutral
• Price Target: $408.00 ▲(17.84%Upside)

Lithia Motors' strong earnings growth and positive technical indicators are the most significant factors driving its stock score. The company's strategic initiatives and revenue growth further bolster its position, despite challenges in cash conversion and debt management.

Positive Factors

Financial Performance

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

Growth Strategy

LAD management is focused on leveraging its expanded store network along with maturing adjacencies to fuel growth and drive a differentiated earnings growth and cost profile vs. peers.

Tariff Advantage

Around 45% of Lithia Motors' inventory is not impacted by tariffs, which is expected to provide a competitive advantage compared to peers with a more tariff-exposed mix.

Negative Factors

Geographic Exposure

LAD’s predominant exposure to the West continues to pose a ~300-350bps relative headwind vs. the public franchise dealership peer group.

Market Conditions

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

Quarterly Results

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

Lithia Motors Business Overview & Revenue Model

Company Description

Lithia Motors, Inc. (LAD) is one of the largest automotive retailers in the United States, operating through a wide network of dealerships across the country. The company engages in the sale of new and used vehicles, vehicle financing, insurance, and automotive repair and maintenance services. Lithia Motors offers a diverse range of vehicles, including both domestic and foreign brands, catering to a broad spectrum of consumer preferences and budgets.

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 shows strong revenue growth and stable profitability metrics, with significant improvements in leverage. However, challenges in converting profits into cash and substantial debt levels necessitate careful management.

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	28.19B	22.83B	13.12B
Gross Profit	5.64B	5.56B	5.18B	5.15B	4.26B	2.23B
EBITDA	2.09B	1.96B	1.97B	2.12B	1.78B	877.20M
Net Income	849.00M	802.00M	1.00B	1.25B	1.06B	470.30M
Balance Sheet
Total Assets	23.48B	23.13B	19.63B	15.01B	11.15B	7.90B
Cash, Cash Equivalents and Short-Term Investments	430.30M	402.20M	941.40M	246.70M	174.80M	160.20M
Total Debt	13.90B	13.86B	11.33B	7.99B	4.96B	4.17B
Total Liabilities	16.70B	16.45B	13.35B	9.76B	6.48B	5.24B
Stockholders Equity	6.76B	6.66B	6.21B	5.21B	4.63B	2.66B
Cash Flow
Free Cash Flow	57.60M	73.70M	-702.60M	-913.20M	1.54B	376.80M
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	1.11B	1.14B

Lithia Motors Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 346.22
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

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 346.22 is above the 20-day moving average (MA) of 334.69, above the 50-day MA of 318.97, and above the 200-day MA of 332.12, indicating a bullish trend. The MACD of 8.06 indicates Negative momentum. The RSI at 62.11 is Neutral, neither overbought nor oversold. The STOCH value of 83.93 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LAD.

Lithia Motors Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
GPI	77 Outperform	$5.97B	13.01	16.25%	0.43%	15.13%	-15.98%
GPI	77 Outperform	$5.97B	13.01	16.25%	0.43%	15.13%	-15.98%
PAG	71 Outperform	$11.97B	12.75	18.57%	2.76%	3.29%	-1.29%
PAG	71 Outperform	$11.97B	12.75	18.57%	2.76%	3.29%	-1.29%
ABG	67 Neutral	$5.00B	12.10	11.92%	―	11.11%	-23.41%
ABG	67 Neutral	$5.00B	12.10	11.92%	―	11.11%	-23.41%
Sector *	63 Neutral	$16.67B	10.98	-6.97%	2.95%	1.72%	-24.21%
LAD	61 Neutral	$9.01B	10.91	12.95%	0.62%	12.96%	-6.25%
AN	60 Neutral	$7.97B	12.50	28.45%	―	-0.24%	-19.76%
AN	60 Neutral	$7.97B	12.50	28.45%	―	-0.24%	-19.76%
SAH	58 Neutral	$2.96B	12.43	24.52%	1.60%	1.59%	43.91%
SAH	58 Neutral	$2.96B	12.43	24.52%	1.60%	1.59%	43.91%

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.