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Lithia Motors (LAD) Down 0.6% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Lithia Motors (LAD - Free Report) . Shares have lost about 0.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Lithia Motors due for a breakout? 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.
Lithia Q2 Earnings Miss Mark, Rise Y/Y
Lithia reported second-quarter 2022 adjusted earnings of $12.18 per share, marking an increase from the prior-year quarter’s $11.12 per share. However, the bottom line missed the Zacks Consensus Estimate of $12.22. Lower-than-expected revenues from new vehicle, used-vehicle wholesale and F&I segments led to the downslide.
Total revenues jumped 20.5% year over year to $7,240 million. The top line however missed the Zacks Consensus Estimate of $7,511 million.
Segmental Performance
New vehicle retail revenues increased 3.3% year over year to $3,250.7 million but missed the Zacks Consensus Estimate of $3,537 million. New vehicle units sold dropped 8.5% from the prior-year quarter to 68,752 units. The average selling price of new-vehicle retail rose to $47,281 from $41,852 in the prior quarter.
The used-vehicle retail revenues surged 39% year over year to $2,509.9 million and topped the Zacks Consensus Estimate of $2,392 million. The used-vehicle retail units sold grew 15.3% from the year-ago quarter to 81,026 units. The average selling price of used-vehicle retail was $30,976, increasing from $25,691. Revenues from used-vehicle wholesale jumped 69.8% to $369.2 million but missed the consensus mark of $375 million.
Revenues from service, body and parts were up 31% from the prior-year period to $682.6 million and crossed the Zacks Consensus Estimate of $637 million. The company’s F&I business revenues grew 22.6% to $330.4 million. The figure missed the consensus estimate of $358 million. Revenues from fleet and others were $97.3 million, surging 93.4% year over year and exceeding the consensus mark of $69 million.
While the same-store new-vehicle revenues fell 16.9% year over year, the same-store used-vehicle retail sales increased 17.5%. The same-store revenues from the F&I business inched down 1.6%, and that of the service, body and parts unit grew 9.4%.
Financial Tidbits
Cost of sales jumped 20.2% year over year in second-quarter 2022. SG&A expenses came in at $781.5 million, increasing from $634 million in the year-ago quarter. Adjusted SG&A as a percentage of gross profit was 58%. Pretax and net profit margins declined from the year-ago levels.
The company approved a dividend of 42 cents per share related to second-quarter 2022 financial results. The dividend is to be paid on Aug 26, 2022, to shareholders of record on Aug 12, 2022.
In 2022, LAD repurchased 2.1 million shares at a weighted average price of $284.58. Under the current share repurchase authorization, approximately $114 million remains available.
Lithia had cash and cash equivalents of $113.2 million as of Jun 30, 2022, down from $174.8 million as of Dec 31, 2021. Long-term debt was $4,721.7 million, marking an increase from $3,185.7 million as of Dec 31, 2021.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Lithia Motors has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Lithia Motors has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Lithia Motors (LAD) Down 0.6% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Lithia Motors (LAD - Free Report) . Shares have lost about 0.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Lithia Motors due for a breakout? 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.
Lithia Q2 Earnings Miss Mark, Rise Y/Y
Lithia reported second-quarter 2022 adjusted earnings of $12.18 per share, marking an increase from the prior-year quarter’s $11.12 per share. However, the bottom line missed the Zacks Consensus Estimate of $12.22. Lower-than-expected revenues from new vehicle, used-vehicle wholesale and F&I segments led to the downslide.
Total revenues jumped 20.5% year over year to $7,240 million. The top line however missed the Zacks Consensus Estimate of $7,511 million.
Segmental Performance
New vehicle retail revenues increased 3.3% year over year to $3,250.7 million but missed the Zacks Consensus Estimate of $3,537 million. New vehicle units sold dropped 8.5% from the prior-year quarter to 68,752 units. The average selling price of new-vehicle retail rose to $47,281 from $41,852 in the prior quarter.
The used-vehicle retail revenues surged 39% year over year to $2,509.9 million and topped the Zacks Consensus Estimate of $2,392 million. The used-vehicle retail units sold grew 15.3% from the year-ago quarter to 81,026 units. The average selling price of used-vehicle retail was $30,976, increasing from $25,691. Revenues from used-vehicle wholesale jumped 69.8% to $369.2 million but missed the consensus mark of $375 million.
Revenues from service, body and parts were up 31% from the prior-year period to $682.6 million and crossed the Zacks Consensus Estimate of $637 million. The company’s F&I business revenues grew 22.6% to $330.4 million. The figure missed the consensus estimate of $358 million. Revenues from fleet and others were $97.3 million, surging 93.4% year over year and exceeding the consensus mark of $69 million.
While the same-store new-vehicle revenues fell 16.9% year over year, the same-store used-vehicle retail sales increased 17.5%. The same-store revenues from the F&I business inched down 1.6%, and that of the service, body and parts unit grew 9.4%.
Financial Tidbits
Cost of sales jumped 20.2% year over year in second-quarter 2022. SG&A expenses came in at $781.5 million, increasing from $634 million in the year-ago quarter. Adjusted SG&A as a percentage of gross profit was 58%. Pretax and net profit margins declined from the year-ago levels.
The company approved a dividend of 42 cents per share related to second-quarter 2022 financial results. The dividend is to be paid on Aug 26, 2022, to shareholders of record on Aug 12, 2022.
In 2022, LAD repurchased 2.1 million shares at a weighted average price of $284.58. Under the current share repurchase authorization, approximately $114 million remains available.
Lithia had cash and cash equivalents of $113.2 million as of Jun 30, 2022, down from $174.8 million as of Dec 31, 2021. Long-term debt was $4,721.7 million, marking an increase from $3,185.7 million as of Dec 31, 2021.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
VGM Scores
At this time, Lithia Motors has a subpar Growth Score of D, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Lithia Motors has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.