For Immediate Release
Chicago, IL – October 25, 2021 – Zacks Equity Research Shares of Lithia Motors, Inc. (
LAD Quick Quote LAD - Free Report) as the Bull of the Day, Las Vegas Sands Corp. ( LVS Quick Quote LVS - Free Report) as the Bear of the Day. In addition, Zacks Equity Research provides analysis on eBay Inc. ( EBAY Quick Quote EBAY - Free Report) , Amphenol Corporation ( APH Quick Quote APH - Free Report) and TE Connectivity Ltd. ( TXN Quick Quote TXN - Free Report) . Here is a synopsis of all five stocks: Lithia Motors reported a record third quarter as auto demand remains red hot. This Zacks Rank #1 (Strong Buy) is expected to grow revenue by 68.7% in 2021.
Lithia Motors, now known as Lithia & Driveway, or LAD, is one of the country's largest auto retailers. It sells new and used cars but also operates an e-commerce site called Driveway, which allows customers to buy or sell a car online.
The company provides a wide array of products and services for the entire vehicle ownership lifecycle.
A Record Third Quarter
On Oct 20, LAD reported its third quarter and blew by the Zacks Consensus Estimate reporting $11.21 versus the consensus of $9.82.
It was the 7th consecutive earnings beat in a row.
It was a record third quarter on both revenue and earnings per share.
Revenue rose 70.4% to $6.2 billion from $3.6 billion a year ago.
All of its segments saw year-over-year gains withsService, body, and parts revenue gaining 60.9%, new vehicle retail revenue up 53.9% and used vehicle retail jumping 90.2%.
"We excelled at procuring used vehicles during the challenging environment, enabling us to offer consumers the most diverse inventory available, driving same store volume increases while continuing to increase margins," said Bryan DeBoer, Lithia & Driveway's President and CEO.
"In addition, Driveway and our store e-commerce offerings are positioned to gain incremental market share as consumers seek out a more transparent and frictionless buying experience," he added.
Driveway achieved a milestone of 1,000 Driveway Shop units in the quarter.
Additionally, the company expanded outside of the United States for the first time, partnering with Pfaff Automotive to enter Canada.
It also expanded its US footprint with acquisitions in new markets. Those deals are expected to contribute $1.7 billion in annualized revenue.
Analysts Raise Earnings Estimates
After yet another quarterly beat, it's not surprising that the analysts raised full year 2021 and 2022 yet again.
The 2021 Zacks Consensus Estimate jumped to $36.00 from $35.45 before the report. That's earnings growth of 97.9% as the company only earned $18.19 during last year's pandemic impacted year.
2 estimates were also raised for 2022, pushing the Zacks Consensus up to $34.80 from $34.52. That's an earnings decline of 3.8%, however, as the analysts don't believe 2022 could possibly be as hot as 2021.
Shares are Cheap
LAD was a big pandemic winner in 2020 and the shares have gained 116% over the last 2 years.
But fears about "peak" earnings have hit the shares in 2021.
They're only up 15.6% year-to-date and have retreated nearly 9% over the last 3 months.
They remain dirt cheap, with a forward P/E of 9.4.
LAD also has a PEG ratio of just 0.5. A PEG ratio under 1.0 usually indicates a company has both growth and value, a rare combination.
LAD is shareholder friendly. It pays a dividend, currently yielding 0.4%.
The Street thinks the strong demand for autos is over.
For those investors who think the Street has it all wrong, Lithia is one to keep on your short list.
Las Vegas Sands is still being impacted by COVID. This Zacks Rank #5 (Strong Sell) missed in the third quarter and analysts cut 2021 estimates
Las Vegas Sands operates resorts in Las Vegas, Singapore and Macao. Its properties include The Venetian Resort and Sands Expo in Las Vegas, the Marina Bay Sands in Singapore, The Venetian Macao, The Plaza and Four Seasons Hotel Macao, The Londoner Macao, The Parisian Macao and the Sands Macao on the Macao Peninsula.
A Third Quarter Miss
On Oct 20, Las Vegas Sands reported its third quarter results and missed on the Zacks Consensus Estimate by $0.20.
Earnings were a loss of $0.45 versus the Zacks Consensus which called for a loss of $0.25.
It has missed 5 out of the last 6 quarters, but they were all quarters during the pandemic.
Revenue rose to $857 million, up from $446 million in the prior year quarter.
But the company is still seeing the impacts from COVID.
"Demand for our offerings from customers who have been able to visit remains strong, but pandemic-related travel restrictions in both Macao and Singapore continue to limit visitation and hinder our current financial performance," said CEO Robert G. Goldstein.
The company is also selling its Las Vegas properties for $6.25 billion. That deal is expected to close in the first quarter of 2022.
Analysts Cut 2021 and 2022 Earnings Estimates
The analysts are bearish about 2021 and 2022.
2 estimates have been cut in 2021 since the report. That has pushed the earnings estimates down to a loss of $0.98 from a loss of $0.84 before the earnings report.
That's still an improvement from last year, when the company lost $2.12.
1 estimate was also cut for 2022 after the report even though earnings are expected to turn around as the global economy reopens. The 2022 Zacks Consensus has fallen to $1.41 from $1.59 in the last week.
But that is earnings growth of 243%.
Shares Back to Coronavirus Lows
With the travel recovery stalled, shares of Las Vegas Sands have been weak in 2021.
Shares are down 36.2% year-to-date.
But they're also testing the March 2020 coronavirus lows.
The stock has no P/E because of the negative earnings expected this year.
But investors might want to keep Las Vegas Sands on their watch list as travel is likely to turn around in 2022.
Additional content: What's in the Offing for eBay's ( EBAY Quick Quote EBAY - Free Report) Q3 Earnings? eBay is scheduled to report third-quarter 2021 results on Oct 27.
For the third quarter, the company expects net revenues of $2.42-$2.47 billion. On a FX-neutral basis, growth in revenues is anticipated to be 6-8% from the year-ago reported figure.
The Zacks Consensus Estimate for revenues is pegged at $2.45 billion, implying a decline of 5.8% from the year-ago reported figure.
Further, the company anticipates non-GAAP earnings of 86-90 cents per share.
The consensus mark for earnings has been unchanged at 89 cents per share over the past 30 days. This indicates growth of 4.7% from the year-ago reported figure.
The company beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters, while matching the same once, with an average of 4.33%.
Let’s see how things have shaped up for this announcement.
Key Factors to Note
eBay’s strong momentum across the Marketplace platform is expected to have contributed well to its top-line growth in the to-be-reported quarter.
The company is likely to have benefited from the increasing number of small businesses turning up to the Marketplace platform in order to expand their reach to customers. This is expected to have bolstered the active seller base on the platform.
The inclusion of easier label printing solutions in the app and enabling faster listings through image or bar code scans are anticipated to have continued aiding the company in delivering an enhanced experience to sellers in the third quarter.
The growing number of sellers are expected to have continued to attract more customers to the platform, which, in turn, is expected to have aided growth in the active buyer base in the quarter under review.
Increased conversions on its platform along with strengthening marketing initiatives are anticipated to have aided the third-quarter performance of the Marketplace platform.
The growing efforts toward the implementation of Artificial Intelligence through personalization, image search technology and customer support are expected to have enhanced the Marketplace platform.
Apart from this, eBay’s strength across Promoted Listings is expected to have continued aiding its momentum across sellers on the back of data-driven recommendations in the third quarter. Also, the solid promoted listings momentum is likely to have contributed well to the performance of the company’s advertisement business.
The growing adoption of the company’s Managed Payments is expected to have continued benefiting it in the quarter to be reported. eBay’s deepening focus on scaling managed payments globally is likely to have been another tailwind.
In addition to these, eBay unveiled Price Guide and Collection tools for trading cards to help enthusiasts view, manage and track the value of their trading card portfolios. This is likely to have benefited the company’s performance in the quarter under review.
However, the rising competitive pressure from e-commerce giants like Amazon is expected to have continued posing challenges to eBay’s market position.
The impacts of eBay’s leveraged balance sheet are expected to get reflected in its third-quarter results.
What Our Model Says
Our proven model does not conclusively predict an earnings beat for eBay this time around. The combination of a positive
Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
eBay has an Earnings ESP of 0.00% and a Zacks Rank #2 at present.
Stocks to Consider
Here are some stocks that you may consider as our model shows that these have the right combination of elements to beat on earnings this season.
Amphenol Corp has an Earnings ESP of +1.02% and a Zacks Rank of 2, currently. You can see the complete list of today’s Zacks #1 Rank stocks here. TE Connectivity has an Earnings ESP of +0.75% and a Zacks Rank of 2, currently.
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