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Lithia (LAD) Buys Wade Ford to Expand Footprint in US Market

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Lithia Motors, Inc. (LAD - Free Report) has made progress in its expansion effort with the acquisition of Wade Ford in Smyrna, GA. Wade Ford will help Lithia expand its footprint in the southeast region. The buyout is expected to add $285 million in annualized revenues.

Wade Ford, operational since 1933, is a local Atlanta area dealership.

Bryan DeBoer, president and CEO of Lithia, said that Wade Ford’s strong reputation with customers and community support will allow Lithia to expand its operation in the highly competitive market.

The transaction was funded using Lithia’s existing on-balance sheet capacity.

With this buyout, Lithia has acquired more than $3.5 billion in annualized revenues year-to-date, setting the stage for another solid year of acquisition growth. Last year, Lithia acquired companies with a total expected annualized revenue exceeding $3.5 billion. It also acquired $17.5 billion in revenues since announcing its 2025 Plan, which targets $50 billion in revenues. Out of the $25 billion of the 2025 Plan network development target, LAD has brought off 70%.

Lithia is currently on an acquisition spree. In March 2023, it purchased Jardine Motors Group to cash in on the latter’s strong track record and market position in the United Kingdom. In June 2023, it acquired 13 car dealerships from the Priority Automotive Group in Virginia to expand its footprint in the booming Mid-Atlantic region. Jardine and Priority Automotive are expected to generate more than $2 billion and $1.2 billion, respectively, in annualized revenues.

Lithia’s diversified product mix and multiple income streams reduce its risk profile and position it for long-term top- and bottom-line growth. Despite current macroeconomic headwinds and industry challenges, the company believes that it is well-positioned to generate $50 billion in revenues and $55-$60 earnings per share by 2025.

Zacks Rank & Key Picks

LAD currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked players in the auto space are Allison Transmission Holdings, Inc. (ALSN - Free Report) , Li Auto Inc. (LI - Free Report) and Wabash National (WNC - Free Report) , currently sporting a Zacks Rank #1.

Allison is a manufacturer of fully-automatic transmissions for medium- and heavy-duty commercial and heavy-tactical U.S. defense vehicles. The Zacks Consensus Estimates for ALSN’s 2023 sales and earnings imply year-over-year growth of 7.5% and 19.5%, respectively.

Li Auto designs, develops, manufactures, and sells premium smart electric SUVs. The Zacks Consensus Estimates for LI’s 2023 sales and earnings indicate year-over-year growth of 131% and 2,400%, respectively.

Wabash is one of the leading manufacturers of semi-trailers in North America. The Zacks Consensus Estimate for WNC’s 2023 sales and earnings indicates year-over-year growth of 12% and 90.7%, respectively.

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