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Is a Disappointment in Store for Lithia's (LAD) Q3 Earnings?
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Lithia Motors (LAD - Free Report) is slated to release third-quarter 2022 results on Oct 19, before the market opens. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share and revenues is pegged at $11.91 and $7.45 billion, respectively. Our estimate for third-quarter EPS and revenues is $12.20 and $7.43 billion, respectively.
For the quarter, the consensus estimate for Lithia’s earnings per share has declined by 11 cents in the past 30 days. Its bottom-line estimates, however, imply growth of 6.24% from the year-ago reported number. The Zacks Consensus Estimate for its revenues suggests a year-over-year increase of 20.7%. Over the trailing four quarters, Lithia surpassed earnings estimates on three occasions and missed once, with the average surprise being 13.01%. This is depicted in the graph below:
In second-quarter 2022, Lithia’s adjusted earnings per share of $12.18 missed the Zacks Consensus Estimate of $12.22 on lower-than-expected revenues from new vehicle, used-vehicle wholesale and F&I segments. The bottom line, however, increased from the prior-year quarter’s $11.12 per share.
Total revenues came at $7,240 million and missed the Zacks Consensus Estimate of $7,511 million. The top line, however, jumped 20.5% year over year.
Earnings Whispers
Our proven model does not predict an earnings beat for the auto retailer for the quarter to be reported, as it does not have the right combination of the two key ingredients. A 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: LAD has an Earnings ESP of -0.88%. This is because the Most Accurate Estimate is pegged 11 cents lower than the Zacks Consensus Estimate.
Zacks Rank: It currently carries a Zacks Rank of 4 (Sell).
Lithia’s strategic buyouts and its Driveway e-commerce program are set to boost the top-line growth of its two major segments — new and used vehicle retail. The Zacks Consensus Estimate for new vehicle retail revenues for the third quarter is pegged at $3,480 million, indicating a rise from $2,898 million reported in the year-ago period. Our estimate for the quarter is $3,388.2 million. The Zacks Consensus Estimate for used vehicle retail revenues for the third quarter stands at $2,471 million, indicating a rise from $2,080 million. Our estimate for the quarter is $2,528.3 million.
Although Lithia is benefiting from rising prices of vehicles, which is set to aid third-quarter revenues, increasing cost of goods sold is likely to have weighed on the firm’s margins. The consensus mark for third-quarter 2022 gross margins in the new vehicle retail segment is pegged at 11.44%, indicating a fall from 12.1% recorded in the corresponding period of 2021. The consensus mark for gross margin in the used vehicle retail segment is 9.33%, implying a contraction from 11.2% recorded in the year-ago period.
Lithia’s intensive expansion plans augur well for long-term growth, but these have likely capped the firm’s financials. With rising SG&A costs, the firm’s quarterly cash flows may have been hindered, thereby limiting profits.
Stocks With Favorable Combination
While an earnings beat looks uncertain for Lithia, here are a few players from the auto space, which, according to our model, have the right combination of elements to post an earnings beat for the quarter to be reported:
Oshkosh (OSK - Free Report) will release third-quarter 2022 results on Oct 27. The company has an Earnings ESP of +0.84% and a Zacks Rank #3.
The Zacks Consensus Estimate for Oshkosh’s to-be-reported quarter’s earnings and revenues is pegged at $1.16 per share and $2.14 billion, respectively. OSK surpassed earnings estimates in two of the trailing four quarters and missed in the rest, with the average surprise being a negative 13.62%.
Lear (LEA - Free Report) will release third-quarter 2022 results on Nov 1. The company has an Earnings ESP of +11.72% and a Zacks Rank #3.
The Zacks Consensus Estimate for Cummins’ to-be-reported quarter’s earnings and revenues is pegged at $2.15 per share and $5.18 billion, respectively. LEA surpassed earnings estimates in three of the trailing four quarters and missed once, with the average surprise being 14.41%.
Cummins (CMI - Free Report) will release third-quarter 2022 results on Nov 3. The company has an Earnings ESP of +0.96% and a Zacks Rank #2.
The Zacks Consensus Estimate for Cummins’ to-be-reported quarter’s earnings and revenues is pegged at $4.87 per share and $6.88 billion, respectively. CMI surpassed earnings estimates in two of the trailing four quarters and missed twice, with the average surprise being 1.49%.
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Is a Disappointment in Store for Lithia's (LAD) Q3 Earnings?
Lithia Motors (LAD - Free Report) is slated to release third-quarter 2022 results on Oct 19, before the market opens. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share and revenues is pegged at $11.91 and $7.45 billion, respectively. Our estimate for third-quarter EPS and revenues is $12.20 and $7.43 billion, respectively.
For the quarter, the consensus estimate for Lithia’s earnings per share has declined by 11 cents in the past 30 days. Its bottom-line estimates, however, imply growth of 6.24% from the year-ago reported number. The Zacks Consensus Estimate for its revenues suggests a year-over-year increase of 20.7%. Over the trailing four quarters, Lithia surpassed earnings estimates on three occasions and missed once, with the average surprise being 13.01%. This is depicted in the graph below:
Lithia Motors, Inc. Price and EPS Surprise
Lithia Motors, Inc. price-eps-surprise | Lithia Motors, Inc. Quote
Q2 Highlights
In second-quarter 2022, Lithia’s adjusted earnings per share of $12.18 missed the Zacks Consensus Estimate of $12.22 on lower-than-expected revenues from new vehicle, used-vehicle wholesale and F&I segments. The bottom line, however, increased from the prior-year quarter’s $11.12 per share.
Total revenues came at $7,240 million and missed the Zacks Consensus Estimate of $7,511 million. The top line, however, jumped 20.5% year over year.
Earnings Whispers
Our proven model does not predict an earnings beat for the auto retailer for the quarter to be reported, as it does not have the right combination of the two key ingredients. A 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: LAD has an Earnings ESP of -0.88%. This is because the Most Accurate Estimate is pegged 11 cents lower than the Zacks Consensus Estimate.
Zacks Rank: It currently carries a Zacks Rank of 4 (Sell).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Things to Note
Lithia’s strategic buyouts and its Driveway e-commerce program are set to boost the top-line growth of its two major segments — new and used vehicle retail. The Zacks Consensus Estimate for new vehicle retail revenues for the third quarter is pegged at $3,480 million, indicating a rise from $2,898 million reported in the year-ago period. Our estimate for the quarter is $3,388.2 million. The Zacks Consensus Estimate for used vehicle retail revenues for the third quarter stands at $2,471 million, indicating a rise from $2,080 million. Our estimate for the quarter is $2,528.3 million.
Although Lithia is benefiting from rising prices of vehicles, which is set to aid third-quarter revenues, increasing cost of goods sold is likely to have weighed on the firm’s margins. The consensus mark for third-quarter 2022 gross margins in the new vehicle retail segment is pegged at 11.44%, indicating a fall from 12.1% recorded in the corresponding period of 2021. The consensus mark for gross margin in the used vehicle retail segment is 9.33%, implying a contraction from 11.2% recorded in the year-ago period.
Lithia’s intensive expansion plans augur well for long-term growth, but these have likely capped the firm’s financials. With rising SG&A costs, the firm’s quarterly cash flows may have been hindered, thereby limiting profits.
Stocks With Favorable Combination
While an earnings beat looks uncertain for Lithia, here are a few players from the auto space, which, according to our model, have the right combination of elements to post an earnings beat for the quarter to be reported:
Oshkosh (OSK - Free Report) will release third-quarter 2022 results on Oct 27. The company has an Earnings ESP of +0.84% and a Zacks Rank #3.
The Zacks Consensus Estimate for Oshkosh’s to-be-reported quarter’s earnings and revenues is pegged at $1.16 per share and $2.14 billion, respectively. OSK surpassed earnings estimates in two of the trailing four quarters and missed in the rest, with the average surprise being a negative 13.62%.
Lear (LEA - Free Report) will release third-quarter 2022 results on Nov 1. The company has an Earnings ESP of +11.72% and a Zacks Rank #3.
The Zacks Consensus Estimate for Cummins’ to-be-reported quarter’s earnings and revenues is pegged at $2.15 per share and $5.18 billion, respectively. LEA surpassed earnings estimates in three of the trailing four quarters and missed once, with the average surprise being 14.41%.
Cummins (CMI - Free Report) will release third-quarter 2022 results on Nov 3. The company has an Earnings ESP of +0.96% and a Zacks Rank #2.
The Zacks Consensus Estimate for Cummins’ to-be-reported quarter’s earnings and revenues is pegged at $4.87 per share and $6.88 billion, respectively. CMI surpassed earnings estimates in two of the trailing four quarters and missed twice, with the average surprise being 1.49%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.