Lithia Motors (LAD) AI Stock Analysis

• Market Cap: $6.87B
• Dividend Yield: 0.64%
• Average Volume (3M): 299.98K
• Price to Earnings (P/E): 8.8
• Beta (1Y): 0.98
• Revenue Growth: 8.56%
• EPS Growth: 17.84%
• Country: US
• Employees: 30,000
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Auto - Dealerships
• EPS (TTM): 6.74
• Shares Outstanding: 24,250,030
• 10 Day Avg. Volume: 350,942
• 30 Day Avg. Volume: 299,979
• PEG Ratio: 1.20
• Price to Book (P/B): 1.27
• Price to Sales (P/S): 0.22
• P/FCF Ratio: 43.99
• Enterprise Value/Market Cap: 3.07
• Enterprise Value/Revenue: 0.56
• Enterprise Value/Gross Profit: 3.77
• Enterprise Value/Ebitda: 10.47
• 1Y Price Target: $380.00
• Price Target Upside: 35.01% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 8
• EPS Forecast (FY): 36.68
• Revenue Forecast (FY): $39.36B

• Rating: 62 Neutral
• Price Target: $319.00 ▲(13.34% Upside)
• Action: Downgraded Date: 02/17/26
• Date: Action: Downgraded 02/17/26

The score is led by solid—but risk-balanced—fundamentals: growing revenue and a strong 2025 cash flow rebound are tempered by notable margin compression and elevated leverage. Earnings call commentary adds support via positive guidance, Driveway Finance momentum, and aggressive buybacks, while technical indicators remain a meaningful near-term headwind. A low P/E provides additional valuation support.

Positive Factors

Revenue Growth & Scale

Sustained top-line growth and record 2025 revenue reflect durable scale across brands and geographies. Scale supports purchasing power, dealer network leverage, and funds M&A and buybacks, underpinning long-term competitiveness and the ability to invest in operations and technology.

Driveway Finance (DFC) Scaling

Rapid growth in captive financing builds a higher‑margin, recurring income stream and deeper customer relationships. Material receivables growth and rising NIM indicate structural capability to scale financing income and cross‑sell, diversifying revenue and improving lifetime customer economics.

Aftersales & Used Vehicle Strength

Outperformance in aftersales and used vehicles provides steady, higher‑margin cash flows less sensitive to new‑vehicle cycles. Strong service margins and used unit growth enhance recurring profitability, improve customer retention, and partially offset volatility in new vehicle sales.

Negative Factors

GPU / Margin Compression

Front‑end gross profit per unit has declined materially, signaling persistent pricing pressure across new and used inventories. Continued GPU compression structurally reduces gross margins and EBITDA, requiring sustained SG&A cuts or pricing fixes to restore long‑term profitability resilience.

Elevated Leverage

Sharp debt accumulation materially raises financial leverage for a cyclical retail model, amplifying earnings volatility and interest expense risk in downturns. Elevated leverage constrains flexibility for acquisitions, buybacks, or weathering weaker auto cycles without tighter capital discipline.

SG&A Deleverage / Cost Structure

Rising SG&A relative to gross profit indicates structural cost pressure that erodes operating leverage. Until SG&A moves toward the stated 60–65% target, margin recovery will be limited, making free cash flow and earnings more sensitive to modest revenue or GPU setbacks.

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 several key streams. The primary source of income comes from the sale of new and used vehicles, which includes a wide range of makes and models from various manufacturers. Additionally, the company earns significant revenue from financing solutions offered to customers at the point of sale, often in partnership with financial institutions. Service and repair revenue is another substantial stream, stemming from their service departments that provide maintenance and repair work on vehicles. Furthermore, Lithia Motors benefits from parts sales, which complement their service offerings. The company also engages in strategic acquisitions of dealerships, which contribute to revenue growth and market expansion. Partnerships with manufacturers and financial companies enhance their service offerings, enabling Lithia to provide competitive financing options and expand their customer base.

Lithia Motors Financial Statement Overview

Summary

Revenue continues to grow, but profitability has materially compressed (gross margin down to ~15.2% in 2025 and net margin ~2.2%). Leverage is a key risk with debt rising sharply to ~$14.7B, and cash generation has been uneven despite a strong 2025 rebound in operating and free cash flow.

Income Statement

Revenue has continued to grow (about 6.5% in 2025 after stronger growth in 2024 and 2023), showing solid scale and demand resilience. However, profitability has been trending down versus earlier years: gross margin has eased from ~18.7% (2021) to ~15.2% (2025), and net margin has compressed to ~2.2% (2025) from ~4–5% (2021–2022). Net income has also declined from the 2022 peak, suggesting a tougher pricing/vehicle margin environment and/or higher costs, even as the top line expands.

Balance Sheet

Leverage is meaningful: total debt rose to ~$14.7B in 2025 from ~$5.0B in 2021, while equity has grown more modestly (to ~$6.6B). In the most recent year where the ratio is provided (2024), debt was a little over 2x equity, which is elevated for a cyclical dealership model and can amplify earnings volatility in weaker auto cycles. The asset base has expanded materially (to ~$25.1B in 2025), but the rapid debt build is the key balance-sheet risk factor.

Cash Flow

Cash generation has been volatile. Operating cash flow swung negative in 2022 and 2023, then rebounded sharply in 2025 to ~$2.0B, with free cash flow also strong at ~$1.67B. That said, 2024 free cash flow was very weak (~$74M) despite positive earnings, and in 2025 free cash flow covered only about 83% of net income, indicating profits are not consistently converting to cash. Overall, the latest year is strong, but the multi-year swings temper the quality-of-cash-flow assessment.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	37.63B	36.19B	31.04B	28.19B	22.83B
Gross Profit	5.47B	5.56B	5.23B	5.15B	4.26B
EBITDA	1.79B	2.26B	2.16B	2.19B	1.78B
Net Income	819.60M	802.00M	1.00B	1.25B	1.06B
Balance Sheet
Total Assets	25.11B	23.13B	19.63B	15.01B	11.15B
Cash, Cash Equivalents and Short-Term Investments	341.80M	402.20M	941.40M	246.70M	174.80M
Total Debt	14.69B	13.86B	11.33B	7.99B	4.96B
Total Liabilities	18.48B	16.45B	13.35B	9.76B	6.48B
Stockholders Equity	6.63B	6.66B	6.21B	5.21B	4.63B
Cash Flow
Free Cash Flow	191.90M	73.70M	-702.60M	-913.20M	1.54B
Operating Cash Flow	542.80M	425.10M	-472.40M	-610.10M	1.80B
Investing Cash Flow	-1.03B	-1.85B	-1.27B	-1.33B	-2.89B
Financing Cash Flow	426.00M	907.60M	2.41B	2.04B	1.11B

Lithia Motors Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 281.46
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: 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 281.46 is below the 20-day moving average (MA) of 311.71, below the 50-day MA of 325.72, and below the 200-day MA of 320.25, indicating a bearish trend. The MACD of -12.69 indicates Positive momentum. The RSI at 28.86 is Positive, neither overbought nor oversold. The STOCH value of 7.37 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LAD.

Lithia Motors Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PAG	71 Outperform	$10.66B	11.45	16.56%	3.14%	2.25%	8.92%
LAD	62 Neutral	$6.87B	8.79	12.36%	0.64%	8.56%	17.84%
ABG	62 Neutral	$4.23B	8.66	13.31%	―	8.07%	60.95%
GPI	62 Neutral	$4.00B	13.34	11.10%	0.49%	19.45%	-24.27%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
KMX	60 Neutral	$6.12B	13.91	7.46%	―	0.12%	2.78%
AN	58 Neutral	$6.88B	11.52	27.05%	―	6.06%	-1.71%

Lithia Motors Corporate Events

Lithia Motors Realigns Technology Leadership Under Finance, Customer Units

Lithia Motors announced a reorganization of its technology leadership, shifting core IT and technology functions to report under Chief Financial Officer Tina Miller and Chief Customer Officer Dianna du Preez. This move is intended to align technology more closely with the company’s business operations, customer needs, and product support.

As part of this change, Senior Vice President and Chief Innovation and Technology Officer George Hines will step down from his executive role effective March 1, 2026, and remain with the company in a non-executive capacity to support an orderly transition. Lithia noted that Hines will also continue serving on the Pinewood.AI public board and publicly acknowledged his leadership and contributions during his tenure, signaling continuity in its broader technology strategy despite the leadership shift.

The most recent analyst rating on (LAD) stock is a Hold with a $355.00 price target. To see the full list of analyst forecasts on Lithia Motors stock, see the LAD Stock Forecast page.

Lithia Motors Posts Record 2025 Revenue Amid Margin Pressures

Lithia Motors operates in automotive retail, selling new and used vehicles and providing aftersales, financing and fleet services through both brick-and-mortar locations and digital platforms, including Driveway and Driveway Finance Corporation. Its diversified model is designed to modernize personal transportation and deliver profitable growth in a large, unconsolidated global market.

On February 11, 2026, Lithia & Driveway reported record full-year 2025 revenue of $37.63 billion, up 4% year over year, with diluted EPS rising about 10% despite softer fourth-quarter profits driven by margin pressures and lower new-vehicle performance. The company highlighted strong same-store used and aftersales growth, record income from its finance arm, $2.4 billion of acquired annualized revenue, share repurchases equal to 11.4% of shares outstanding in 2025 and a $0.55 per-share dividend tied to its fourth-quarter results, underscoring ongoing capital returns and expansion amid a challenging but dynamic market.

Lithia & Driveway’s fourth-quarter 2025 revenue was essentially flat at $9.20 billion, while net income and adjusted EPS declined versus the prior year as the company absorbed margin compression and headwinds in new vehicle sales. Nonetheless, the group exited the year with about $1.5 billion in liquidity and continued to balance acquisitions and divestitures, seeking to consolidate its position as the leading global auto retailer.

The most recent analyst rating on (LAD) stock is a Buy with a $390.00 price target. To see the full list of analyst forecasts on Lithia Motors stock, see the LAD Stock Forecast page.