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Lithia Motors (LAD) Moves 3.6% Higher: Will This Strength Last?

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Lithia Motors (LAD - Free Report) shares rallied 3.6% in the last trading session to close at $341.75. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 7.9% loss over the past four weeks.

Lithia’s spree of buyouts drove the stock higher. Very recently, the company announced the acquisition of Toyota of Jackson in Mississippi. The buyout is set to add $95 million in combined annualized revenues. Since the company’s five-year plan roll-out, the retailer has achieved $7.6 billion in total expected annualized revenues acquired. Investors are also impressed with the company’s breakthrough sales report for May 2021. Record revenues of $2.1 billion registered in May not only reflected 104% increase from the year-ago level, but also grew 89% from the pre-pandemic 2019 levels.

This auto dealership chain is expected to post quarterly earnings of $5.85 per share in its upcoming report, which represents a year-over-year change of +57.3%. Revenues are expected to be $5 billion, up 81.4% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Lithia Motors, the consensus EPS estimate for the quarter has been revised 2.8% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on LAD going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>


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