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Lithia Motors (LAD) Down 18.2% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Lithia Motors (LAD - Free Report) . Shares have lost about 18.2% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Lithia Q4 Earnings Miss Mark and Inch Down Y/Y
Lithia reported fourth-quarter 2022 adjusted earnings of $9.05 per share, which decreased from the prior-year quarter’s $11.39. The bottom line also missed the Zacks Consensus Estimate of $10.11 per share. Lower-than-expected revenues from used vehicle retail and F&I segments resulted in the downslide. Total revenues jumped 10.8% year over year to $6,990.2 million. The top line also topped the Zacks Consensus Estimate of $6,893 million.
Segmental Performance
New vehicle retail revenues increased 10.6% year over year to $3,275.1 million and surpassed the Zacks Consensus Estimate of $3,228 million. The new vehicle units sold rose 5.2% from the prior-year quarter to 68,159 units and beat the consensus metric of 67,892 units. The average selling price of new-vehicle retail rose to $48,051 from $45,671 in the prior quarter and beat the consensus mark of $46,399. However, the gross margin in the segment decreased 240 basis points (bps) to 11.1% amid high cost of sales, which flared up 13.7% year over year.
Used-vehicle retail revenues climbed 10.4% year over year to $2,229.5 million but fell short of the Zacks Consensus Estimate of $2,243 million. The used-vehicle retail units sold grew 8.5% from the year-ago quarter to 75,834 units and missed the consensus metric of 79,486 units. The average selling price of used-vehicle retail was $29,399, increasing 1.8% year over year and beating the consensus mark of $28,729. The gross margin in the segment came down 390 bps to 7.3%. Revenues from used-vehicle wholesale inched down 2.2% to $336 million but outpaced the consensus mark of $319 million.
Revenues from service, body and parts were up 17.9% from the prior-year period to $716.2 million and crossed the Zacks Consensus Estimate of $711 million. The gross margin in the segment increased 260 bps to 53.9%. The company’s F&I business revenues grew 7.7% to $308.4 million but the figure missed the consensus estimate of $327 million. Revenues from fleet and others were $125 million, up 34% year over year and exceeded the consensus mark of $105 million.
While same-store new-vehicle revenues fell 0.9% year over year, the same-store used-vehicle retail sales increased 2%. The same-store revenues from the F&I business dipped 3.4%, and that of the service, body and parts unit grew 8.5%.
Financial Tidbits
Cost of sales jumped 14.1% year over year in fourth-quarter 2022. SG&A expenses were $753.4 million, increasing 6.8% from $705.7 million in the year-ago quarter. Adjusted SG&A as a percentage of gross profit was 62.8%. Pretax and net profit margins declined from the year-ago levels.
The company approved a dividend of 42 cents per share, which is to be paid on Mar 24, 2032, to shareholders of record on Mar 10, 2023.
During the quarter under review, Lithia bought back 174,000 shares at an average price of $198. In 2022, it repurchased 2.4 million shares at a weighted average price of roughly $276. Under the current share repurchase authorization, approximately $501 million remains available.
Lithia had cash/cash equivalents/restricted cash of $246.7 million as of Dec 31, 2022, up from $174.8 million as of Dec 31, 2021. Long-term debt was $5,088.3 million as of 2022-end, marking an increase from $2,868.1 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 poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, 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 D. 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 indicates a downward shift. 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 18.2% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Lithia Motors (LAD - Free Report) . Shares have lost about 18.2% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Lithia Q4 Earnings Miss Mark and Inch Down Y/Y
Lithia reported fourth-quarter 2022 adjusted earnings of $9.05 per share, which decreased from the prior-year quarter’s $11.39. The bottom line also missed the Zacks Consensus Estimate of $10.11 per share. Lower-than-expected revenues from used vehicle retail and F&I segments resulted in the downslide. Total revenues jumped 10.8% year over year to $6,990.2 million. The top line also topped the Zacks Consensus Estimate of $6,893 million.
Segmental Performance
New vehicle retail revenues increased 10.6% year over year to $3,275.1 million and surpassed the Zacks Consensus Estimate of $3,228 million. The new vehicle units sold rose 5.2% from the prior-year quarter to 68,159 units and beat the consensus metric of 67,892 units. The average selling price of new-vehicle retail rose to $48,051 from $45,671 in the prior quarter and beat the consensus mark of $46,399. However, the gross margin in the segment decreased 240 basis points (bps) to 11.1% amid high cost of sales, which flared up 13.7% year over year.
Used-vehicle retail revenues climbed 10.4% year over year to $2,229.5 million but fell short of the Zacks Consensus Estimate of $2,243 million. The used-vehicle retail units sold grew 8.5% from the year-ago quarter to 75,834 units and missed the consensus metric of 79,486 units. The average selling price of used-vehicle retail was $29,399, increasing 1.8% year over year and beating the consensus mark of $28,729. The gross margin in the segment came down 390 bps to 7.3%. Revenues from used-vehicle wholesale inched down 2.2% to $336 million but outpaced the consensus mark of $319 million.
Revenues from service, body and parts were up 17.9% from the prior-year period to $716.2 million and crossed the Zacks Consensus Estimate of $711 million. The gross margin in the segment increased 260 bps to 53.9%. The company’s F&I business revenues grew 7.7% to $308.4 million but the figure missed the consensus estimate of $327 million. Revenues from fleet and others were $125 million, up 34% year over year and exceeded the consensus mark of $105 million.
While same-store new-vehicle revenues fell 0.9% year over year, the same-store used-vehicle retail sales increased 2%. The same-store revenues from the F&I business dipped 3.4%, and that of the service, body and parts unit grew 8.5%.
Financial Tidbits
Cost of sales jumped 14.1% year over year in fourth-quarter 2022. SG&A expenses were $753.4 million, increasing 6.8% from $705.7 million in the year-ago quarter. Adjusted SG&A as a percentage of gross profit was 62.8%. Pretax and net profit margins declined from the year-ago levels.
The company approved a dividend of 42 cents per share, which is to be paid on Mar 24, 2032, to shareholders of record on Mar 10, 2023.
During the quarter under review, Lithia bought back 174,000 shares at an average price of $198. In 2022, it repurchased 2.4 million shares at a weighted average price of roughly $276. Under the current share repurchase authorization, approximately $501 million remains available.
Lithia had cash/cash equivalents/restricted cash of $246.7 million as of Dec 31, 2022, up from $174.8 million as of Dec 31, 2021. Long-term debt was $5,088.3 million as of 2022-end, marking an increase from $2,868.1 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 poor Growth Score of F, however its Momentum Score is doing a bit better with a D. However, 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 D. 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 indicates a downward shift. Notably, Lithia Motors has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.