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LKQ (LKQ) Up 11.7% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for LKQ (LKQ - Free Report) . Shares have added about 11.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is LKQ 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 drivers.

LKQ Corp Q2 Earnings & Revenue Surpass Estimates

LKQ Corp reported adjusted earnings of 53 cents per share in second-quarter 2020, surpassing the Zacks Consensus Estimate of 14 cents. However, the bottom line decreased 18.5% year over year. Lower year-over-year revenues and EBITDA across all the segments led to this underperformance.

Quarterly revenues came in at 2,626.3 million, topping the Zacks Consensus Estimate of $2,373 million. However, the top line decreased from the year-ago level of $3,248.2 million. Parts and services organic growth also fell 16.18% year over year.

Segment Highlights

Revenues from the North American unit totaled $892.8 million, down from $1,165.5 million recorded in the prior-year quarter. EBITDA from the segment came in at 149.5 million, down 21.3% year over year.

Revenues from the European segment totaled $1,206.3 million, down from $1,511 million recorded in the prior-year quarter. EBITDA from the segment came in at $89.4 million, down 23.1% year over year.

Revenues and EBITDA from the Specialty segment came in at $404 million and $52.2 million, down from the year-ago respective figures of $410.3 million and $52.4 million.

Financial Position

LKQ Corp. had cash and cash equivalents of $476.4 million as of Jun 30, 2020, down from $523 million recorded as of Dec 31, 2019. Long-term debt amounted to $3,157.7 million, down from $3,715.4 million recorded as of Dec 31, 2019. During the quarter under review, the company generated net cash of $718 million from operations, up 56% from the year-ago period. It generated free cash flow of $686 million in the quarter, up 66% year over year.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 18.24% due to these changes.

VGM Scores

At this time, LKQ has a strong Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile 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 broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, LKQ has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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