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Lithia (LAD) Up 4.2% Since Solid Q1 Earnings & Dividend Hike

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Lithia Motors (LAD - Free Report) extended its rally for the third straight day on Apr 23, following first-quarter 2021 earnings release on Apr 21. Shares of the company increased 4.2% on the back of stellar results. Not only did the auto retailer post a comprehensive beat, it also recorded higher year-over-year earnings and revenues. Investors were also encouraged by the fact that the company hiked dividend payout.

It reported first-quarter 2021 adjusted earnings of $5.89 per share, which beat the Zacks Consensus Estimate of $4.73. Higher-than-expected revenues across all units but one led to the outperformance. The bottom line increased a whopping 193% from the prior-year quarter’s $2.01 per share. Total revenues also rose 54.9% year over year to $4,343 million. Moreover, the top line surpassed the Zacks Consensus Estimate of $3,865 million. In fact, for the reported quarter, Lithia Motors claims to have reported the highest quarterly earnings and revenues in its history.

Segmental Performance

New vehicle retail revenues increased 59.7% year over year to $2,193.2 million and topped the Zacks Consensus Estimate of $1,959 million. New vehicle units sold climbed 50% from the prior-year quarter to 53,864. The average selling price of new-vehicle retail rose 6.4% from the prior-year quarter to $40,718.

Used-vehicle retail revenues rose 54.6% year over year to $1,352.2 million and beat the Zacks Consensus Estimate of $1,211 million. Used-vehicle retail units sold grew 38.5% from the year-ago quarter to 59,027. The average selling price of used-vehicle retail improved 11.7% to $22,907 from the year-ago figure of $20,510. Revenues from used-vehicle wholesale surged 102.7% year over year to $135.2 million and surpassed the consensus mark of $92 million.

Revenues from service, body and parts were up 22.5% from the prior-year period to $404 million but fell shy of the Zacks Consensus Estimate of $416 million. The company’s F&I (Finance & Insurance) business recorded 62.8% year-over-year growth in revenues to $198.4 million, topping the consensus estimate of $179 million. Revenues from fleet and others were $60 million, which increased 60.4% year over year, surpassing the consensus mark of $43.36 million.

While same-store new vehicle sales rose 29.4% year over year, same-store used vehicle retail sales increased 32%. While same-store revenues from the F&I business soared 29.7%, that of the service, body and parts unit dropped 1% from the prior-year quarter.

Financial Tidbits

Cost of sales increased 54.8% year over year for first-quarter 2021. However, SG&A — as a percentage of gross profit — decreased from the prior-year level. Encouragingly, pretax and net profit margins improved from the year-ago levels.

Bringing in pleasant news for investors, the board approved a dividend increase of 12.9% from the prior payout. Quarterly dividend of 35 cents a share will be payable on May 21 to shareholders of record as of May 7, 2021.

Lithia had cash and cash equivalents of $170.3 million as of Mar 31, 2021. Long-term debt was $2,124 million, marking an increase from $2,064.7 million as of Dec 31, 2020.

Lithia — which shares space with other auto retailers like Asbury Automotive Group Inc. (ABG - Free Report) , Americas CarMart Inc. (CRMT - Free Report) and Group 1 Automotive Inc. (GPI - Free Report) — currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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