Back to top

Analyst Blog

Lithia Motors Inc. (LAD - Snapshot Report) posted a 41.9% increase in adjusted earnings per share to $1.05 in the second quarter of 2013 compared with 74 cents earned in the corresponding quarter last year. Reported earnings also surpassed the Zacks Consensus Estimate by 13 cents. Net income jumped 40.9% to $27.4 million from $19.4 million in the year-ago quarter.

Revenues for the quarter increased 22.6% to $1.0 billion from $822.3 million in the year-ago quarter, beating the Zacks Consensus Estimate of $986.0 million. The improvement in revenues was driven by better performance across all the segments, with finance and insurance business, and new vehicle and used vehicle sales being the bright spots. Recent acquisition and same store sales had favorable impacts on the company’s revenues.

Revenues from new vehicle sales improved 24.9% to $569.5 million in the quarter. New vehicle retail sales increased 21.8% to 17,024 units. Revenues per vehicle increased 2.5% to $33,452. On a same-store basis, revenues from new vehicle sales went up 18.9% to $541.7 million.

Revenues from used vehicle retail climbed 24.7% to $258.5 million in the quarter. Revenues from used vehicle wholesale went up 7.4% to $37.7 million. Used vehicle retail sales improved 21.3% to 14,074 units with revenues per vehicle increasing 2.8% to $18,365. Same-store revenues from used vehicle retail sales went up 18.7% to $246.0 million and used vehicle wholesale sales gained 1.6% to $35.6 million.

Revenues from service body and parts went up 10.5% to $94.5 million. Meanwhile, the company’s finance and insurance business witnessed a 25.9% rise in revenues to $34.2 million. Revenues from Fleet and other went up 25.3% to $14.2 million.

Gross profit increased 19.2% to $159.8 million from $134.1 million in the year-ago quarter. Operating income improved 23.7% to $45.7 million from $36.9 million in the second quarter of 2012.

Financial Details

Lithia Motors had cash and cash equivalents of $20.3 million as of Jun 30, 2013, down from $42.8 million as of Dec 31, 2012. Total debt was $301.0 million as of Jun 30, 2013 compared with $295.1 million as of Dec 31, 2012.

In the first half of 2013, the company had an operating cash flow of $24.4 million compared with a cash outflow of $152.0 million in the corresponding period of 2012.

New Store information

In Jun 2013, Lithia purchased BMW, Honda and Volkswagen stores in Salem, Ore. These stores are expected to generate $110 million additional revenues annually. The company also opened a MINI store in Anchorage, Alaska in Apr, 2013, which will yield annualized revenues of $13 million.

Outlook

Lithia Motors expects earnings in the range of $1.06 to $1.08 per share for the third quarter of 2013 and $3.80 to $3.85 for full year 2013. The company expects revenues between $3.9 billion and $4.0 billion for 2013, with a 17% increase in new vehicle same-store sales and a 16.5% rise in used vehicle same-store sales.

Same-store sales from service body and parts are expected to improve 7%. The company also expects capital expenditures of $55.0 million and a tax rate of 39.5% for 2013.

Our Take

Lithia Motors is the ninth largest automotive retailer in the U.S. With 91 stores in 11 states, the company provides 27 new vehicle brands along with all brands of used vehicle. Currently, it retains a Zacks Rank #1 (Strong Buy).

AutoNation Inc. (AN - Analyst Report), another prominent automotive retailer in the U.S, posted a 10.6% rise in earnings per share to 73 cents in the second quarter. However, earnings missed the Zacks Consensus Estimate by a penny.

Revenues increased 13.4% to $4.43 billion, beating the Zacks Consensus Estimate of $4.35 billion. The revenue growth was attributable to strong performance in all business sectors along with higher revenues from retailed used vehicle and Finance and Insurance businesses.

Some other stocks that are performing well in the industry where Lithia Motors operates include Asbury Automotive Group, Inc. (ABG - Snapshot Report) and Group 1 Automotive Inc. (GPI - Snapshot Report). Asbury Automotive carries a Zacks Rank #1 (Strong Buy) while Group 1 is a Zacks Rank #2 (Buy) stock.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
QIHOO 360 T… QIHU 95.04 +4.95%
PILGRIM'S P… PPC 31.52 +3.72%
CLAYTON WIL… CWEI 138.97 +3.55%
FLAMEL TECH… FLML 14.02 +3.16%
CALLON PETE… CPE 11.50 +3.14%