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LKQ Corporation’s (LKQ - Free Report) third-quarter 2018 adjusted earnings from continuing operations came in at 56 cents per share, in line with the Zacks Consensus Estimate. The bottom line improved from the prior-year quarter’s 45 cents. Adjusted net income from continuing operations was $177 million compared with $140 million in the year-earlier quarter.
In the third quarter, total revenues rose 26.6% to $3.12 billion from $2.47 billion a year ago and surpassed Zacks Consensus Estimate of $3.11 billion. The company witnessed 4.3% organic revenue growth in parts and services, out of which its North American, European, and specialty segments contributed 5.2%, 2% and 8%, respectively.
In the third quarter of 2018, LKQ Corp recorded a $23-million impairment charge related to its equity investment in Mekonomen AB. In the fourth quarter 2018, the company exercised its right to purchase approximately 5.4 million shares of Mekonomen at a price of SEK 79 per share.
During the quarter under review, the company announced that its board has approved share repurchase of up to $500 million through Oct 25, 2021. As of Sep 30, 2018, the company had outstanding shares of 318.2 million.
In Europe, the company acquired three wholesale businesses during the third quarter for a consideration of approximately $79 million. Its European operations also opened seven branches in Eastern Europe.
Financial Position
LKQ Corp had cash and cash equivalents of $341.3 million as of Sep 30, 2018, compared with $275 million as of Sep 30, 2017.
For the third quarter of 2018, LKQ Corp had net cash provided by operating activities of around $521 million.
2018 Outlook
For 2018, LKQ Corp expects organic revenue growth for parts & services in the range of 4.5-5% in comparison to the prior guidance of 4.5-5.5%.
Further, adjusted net income from continuing operations is expected in the range of $690-$710 million, down from the earlier guidance of $710-$735 million. Adjusted earnings per share from continuing operations in 2018 are expected in the band of $2.19 to $2.25, down from the prior view of $2.25-$2.33.
Allison Transmission has an expected long-term growth rate of 10%. Over the past six months, shares of the company have gained 13%.
Advance Auto Parts has an expected long-term growth rate of 12.3%. Over the past two years, shares of the company have risen 40.6%.
Navistar has an expected long-term growth rate of 5%. Over the past two years, shares of the company have surged 35.3%.
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LKQ Corp Q3 Earnings Meet & Revenues Beat, Increase Y/Y
LKQ Corporation’s (LKQ - Free Report) third-quarter 2018 adjusted earnings from continuing operations came in at 56 cents per share, in line with the Zacks Consensus Estimate. The bottom line improved from the prior-year quarter’s 45 cents. Adjusted net income from continuing operations was $177 million compared with $140 million in the year-earlier quarter.
In the third quarter, total revenues rose 26.6% to $3.12 billion from $2.47 billion a year ago and surpassed Zacks Consensus Estimate of $3.11 billion. The company witnessed 4.3% organic revenue growth in parts and services, out of which its North American, European, and specialty segments contributed 5.2%, 2% and 8%, respectively.
LKQ Corporation Price, Consensus and EPS Surprise
LKQ Corporation Price, Consensus and EPS Surprise | LKQ Corporation Quote
Business Developments
In the third quarter of 2018, LKQ Corp recorded a $23-million impairment charge related to its equity investment in Mekonomen AB. In the fourth quarter 2018, the company exercised its right to purchase approximately 5.4 million shares of Mekonomen at a price of SEK 79 per share.
During the quarter under review, the company announced that its board has approved share repurchase of up to $500 million through Oct 25, 2021. As of Sep 30, 2018, the company had outstanding shares of 318.2 million.
In Europe, the company acquired three wholesale businesses during the third quarter for a consideration of approximately $79 million. Its European operations also opened seven branches in Eastern Europe.
Financial Position
LKQ Corp had cash and cash equivalents of $341.3 million as of Sep 30, 2018, compared with $275 million as of Sep 30, 2017.
For the third quarter of 2018, LKQ Corp had net cash provided by operating activities of around $521 million.
2018 Outlook
For 2018, LKQ Corp expects organic revenue growth for parts & services in the range of 4.5-5% in comparison to the prior guidance of 4.5-5.5%.
Further, adjusted net income from continuing operations is expected in the range of $690-$710 million, down from the earlier guidance of $710-$735 million. Adjusted earnings per share from continuing operations in 2018 are expected in the band of $2.19 to $2.25, down from the prior view of $2.25-$2.33.
Zacks Rank & Key Picks
LKQ Corp has a Zacks Rank #3 (Hold).
A few better-ranked stocks in the auto space are Allison Transmission Holdings, Inc. (ALSN - Free Report) , Advance Auto Parts, Inc. (AAP - Free Report) and Navistar International Corporation , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Allison Transmission has an expected long-term growth rate of 10%. Over the past six months, shares of the company have gained 13%.
Advance Auto Parts has an expected long-term growth rate of 12.3%. Over the past two years, shares of the company have risen 40.6%.
Navistar has an expected long-term growth rate of 5%. Over the past two years, shares of the company have surged 35.3%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>