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Lithia Motors (LAD) Up 3.3% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Lithia Motors (LAD - Free Report) . Shares have added about 3.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Lithia Motors due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Lithia Motors Puts Up a Solid Show in Q4
Lithia Motors reported fourth-quarter adjusted earnings of $11.39 per share, a whopping 109% increase from the prior-year quarter’s $5.46 per share. The figure also beat the Zacks Consensus Estimate of $9.99. Higher-than-expected revenues from new vehicle, used-vehicle (retail and wholesale) and fleet and others segments led to this outperformance.
Total revenues jumped 60.1% year over year to $6,309.5 million, but the top line missed the Zacks Consensus Estimate of $6,318.4 million.
Lithia Motors claims to have reported the highest fourth-quarter earnings and revenues in its history.
Segmental Performance
New vehicle retail revenues increased 37.7% year over year to $2,960 million and topped the Zacks Consensus Estimate of $2,930 million. New vehicle units sold climbed 23.5% from the prior-year quarter to 64,812. The average selling price of new-vehicle retail rose 11.5% to $45,671.
The used-vehicle retail revenues surged 82.1% year over year to $2,018.7 million and marginally missed the Zacks Consensus Estimate of $2,019 million. The used-vehicle retail units sold grew 46.5% from the year-ago quarter to 69,914. The average selling price of used-vehicle retail improved 24.3% to $28,874 from the year-ago figure. Revenues from used-vehicle wholesale skyrocketed 274.3% to $343.6 million and surpassed the consensus mark of $259 million.
Revenues from service, body and parts were up 58.3% from the prior-year period to $607.6 million, but missed the Zacks Consensus Estimate of $610 million. The company’s F&I business recorded 65.9% year-over-year growth in revenues to $286.3 million, but missed the consensus estimate of $294 million. Revenues from fleet and others were $93.3 million, jumping 164.3% year over year and exceeding the consensus mark of $54 million.
While the same-store new vehicle revenues fell 8.1% year over year, the same-store used vehicle retail sales increased 39.4%. The same-store revenues from the F&I business climbed 18.5%, and that of the service, body and parts unit grew 11.7%.
Financial Tidbits
Cost of sales jumped 53.8% year over year in fourth-quarter 2021. SG&A expenses — as a percentage of gross profit — declined 520 basis points from 62% recorded in the prior-year quarter to 56.8%. Encouragingly, pretax and net profit margins also improved from the year-ago levels.
A quarterly dividend of 35 cents a share will be payable on Mar 25, 2022, to shareholders of record on Mar 11, 2022.
Lithia had cash and cash equivalents of $174.8 million as of Dec 31, 2021. Long-term debt was $3,185.7 million, marking a 54.3% increase from $2,064.7 million as of Dec 31, 2020.
During the quarter, LAD repurchased 756,883 shares at a weighted average price of $283.75. In 2022, it has repurchased almost an additional 154,923 shares at a weighted average price of $283.89.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Lithia Motors has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Lithia Motors has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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Lithia Motors (LAD) Up 3.3% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Lithia Motors (LAD - Free Report) . Shares have added about 3.3% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Lithia Motors due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Lithia Motors Puts Up a Solid Show in Q4
Lithia Motors reported fourth-quarter adjusted earnings of $11.39 per share, a whopping 109% increase from the prior-year quarter’s $5.46 per share. The figure also beat the Zacks Consensus Estimate of $9.99. Higher-than-expected revenues from new vehicle, used-vehicle (retail and wholesale) and fleet and others segments led to this outperformance.
Total revenues jumped 60.1% year over year to $6,309.5 million, but the top line missed the Zacks Consensus Estimate of $6,318.4 million.
Lithia Motors claims to have reported the highest fourth-quarter earnings and revenues in its history.
Segmental Performance
New vehicle retail revenues increased 37.7% year over year to $2,960 million and topped the Zacks Consensus Estimate of $2,930 million. New vehicle units sold climbed 23.5% from the prior-year quarter to 64,812. The average selling price of new-vehicle retail rose 11.5% to $45,671.
The used-vehicle retail revenues surged 82.1% year over year to $2,018.7 million and marginally missed the Zacks Consensus Estimate of $2,019 million. The used-vehicle retail units sold grew 46.5% from the year-ago quarter to 69,914. The average selling price of used-vehicle retail improved 24.3% to $28,874 from the year-ago figure. Revenues from used-vehicle wholesale skyrocketed 274.3% to $343.6 million and surpassed the consensus mark of $259 million.
Revenues from service, body and parts were up 58.3% from the prior-year period to $607.6 million, but missed the Zacks Consensus Estimate of $610 million. The company’s F&I business recorded 65.9% year-over-year growth in revenues to $286.3 million, but missed the consensus estimate of $294 million. Revenues from fleet and others were $93.3 million, jumping 164.3% year over year and exceeding the consensus mark of $54 million.
While the same-store new vehicle revenues fell 8.1% year over year, the same-store used vehicle retail sales increased 39.4%. The same-store revenues from the F&I business climbed 18.5%, and that of the service, body and parts unit grew 11.7%.
Financial Tidbits
Cost of sales jumped 53.8% year over year in fourth-quarter 2021. SG&A expenses — as a percentage of gross profit — declined 520 basis points from 62% recorded in the prior-year quarter to 56.8%. Encouragingly, pretax and net profit margins also improved from the year-ago levels.
A quarterly dividend of 35 cents a share will be payable on Mar 25, 2022, to shareholders of record on Mar 11, 2022.
Lithia had cash and cash equivalents of $174.8 million as of Dec 31, 2021. Long-term debt was $3,185.7 million, marking a 54.3% increase from $2,064.7 million as of Dec 31, 2020.
During the quarter, LAD repurchased 756,883 shares at a weighted average price of $283.75. In 2022, it has repurchased almost an additional 154,923 shares at a weighted average price of $283.89.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
At this time, Lithia Motors has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Lithia Motors has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.