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Why Is Lithia Motors (LAD) Down 7.2% Since Last Earnings Report?
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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 7.2% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Lithia reported fourth-quarter 2023 adjusted earnings of $8.24 per share, which declined from the prior-year quarter’s $9.05 but beat the Zacks Consensus Estimate of $8.11.
Total revenues jumped 10% year over year to $7.74 billion. The top line outpaced the Zacks Consensus Estimate of $7.67 billion.
Segmental Performance
New vehicle retail revenues increased 21.4% year over year to $3.97 billion, surpassing our estimate of $3.79 billion due to an increase in the number of units sold.
New vehicle units sold rose 18.2% from the prior-year quarter’s levels to 80,596 units, beating our estimate of 79,527 units.
The average selling price (ASP) of new-vehicle retail increased to $49,318 from $48,051 reported in the prior-year quarter, surpassing our estimate of $47,682. However, the gross margin in this segment contracted 320 basis points (bps) to 7.9% amid the high cost of sales, which flared up 25.8% year over year to $3.7 billion and beat our projection of $3.39 billion.
Used-vehicle retail revenues rose 1.8% year over year to $2.27 billion but missed our estimate of $2.34 billion. Lower-than-anticipated number of units sold resulted in the underperformance.
The used-vehicle retail units sold rose 3.4% from the year-ago quarter to 78,424 units, lagging our expectation of 82,195 units. The ASP of used-vehicle retail was $28,913, dropping 1.6% year over year but outpacing our projection of $28,440.8. The gross margin in the segment declined 50 bps to 6.8%.
Revenues from used-vehicle wholesale fell 17.3% to $242.9 million and missed our estimate of $370.5 million.
Revenues from service, body and parts were up 14.3% from the prior-year period’s levels to $818.3 million, outpacing our estimate of $756.4 million. The gross margin in the segment increased 110 bps to 55%.
The company’s finance and insurance revenues rose 7.5% to $331.5 million and exceeded our estimate of $300.7 million.
Revenues from fleet and others were $39.4 million, which plunged 68.5% year over year and missed our expectation of $98 million.
Same-store new-vehicle revenues increased 10.1% year over year and same-store used-vehicle retail sales declined 10.8%.
The same-store revenues from finance and insurance rose 1.5%, while that of the service, body and parts unit grew 2.7%.
Financial Tidbits
Cost of sales jumped 11.8% year over year in fourth-quarter 2023. SG&A expenses were $836.8 million, up 11.1% from $753.4 million in the year-ago quarter. Adjusted SG&A as a percentage of gross profit was 65.2%. Pretax and net profit margins declined from the year-ago levels.
The company approved a dividend of 50 cents per share, to be paid on Mar 22, 2024, to shareholders of record as of Mar 9, 2024. The company repurchased more than 142,700 shares at an average price of $240.81. As of Dec 31, 2023, Lithia had approximately $467 million shares remaining under its buyback authorization.
Lithia had cash/cash equivalents/restricted cash of $941.4 million as of Dec 31, 2023, up from $246.7 million as of Dec 31, 2022. Long-term debt was $5.5 billion as of Dec 31, 2023, up from $5.1 billion as of Dec 31, 2022.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -5.88% due to these changes.
VGM Scores
At this time, Lithia Motors has a poor Growth Score of F, 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 C. 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.
Performance of an Industry Player
Lithia Motors belongs to the Zacks Automotive - Retail and Whole Sales industry. Another stock from the same industry, Penske Automotive (PAG - Free Report) , has gained 0.2% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Penske reported revenues of $7.27 billion in the last reported quarter, representing a year-over-year change of +3.7%. EPS of $3.45 for the same period compares with $4.21 a year ago.
Penske is expected to post earnings of $3.44 per share for the current quarter, representing a year-over-year change of -20.2%. Over the last 30 days, the Zacks Consensus Estimate has changed +2.9%.
Penske has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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Why Is Lithia Motors (LAD) Down 7.2% Since Last Earnings Report?
It has been about a month since the last earnings report for Lithia Motors (LAD - Free Report) . Shares have lost about 7.2% 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 the most recent earnings report in order to get a better handle on the important catalysts.
Lithia Q4 Earnings Surpass Estimates, Decrease Y/Y
Lithia reported fourth-quarter 2023 adjusted earnings of $8.24 per share, which declined from the prior-year quarter’s $9.05 but beat the Zacks Consensus Estimate of $8.11.
Total revenues jumped 10% year over year to $7.74 billion. The top line outpaced the Zacks Consensus Estimate of $7.67 billion.
Segmental Performance
New vehicle retail revenues increased 21.4% year over year to $3.97 billion, surpassing our estimate of $3.79 billion due to an increase in the number of units sold.
New vehicle units sold rose 18.2% from the prior-year quarter’s levels to 80,596 units, beating our estimate of 79,527 units.
The average selling price (ASP) of new-vehicle retail increased to $49,318 from $48,051 reported in the prior-year quarter, surpassing our estimate of $47,682. However, the gross margin in this segment contracted 320 basis points (bps) to 7.9% amid the high cost of sales, which flared up 25.8% year over year to $3.7 billion and beat our projection of $3.39 billion.
Used-vehicle retail revenues rose 1.8% year over year to $2.27 billion but missed our estimate of $2.34 billion. Lower-than-anticipated number of units sold resulted in the underperformance.
The used-vehicle retail units sold rose 3.4% from the year-ago quarter to 78,424 units, lagging our expectation of 82,195 units. The ASP of used-vehicle retail was $28,913, dropping 1.6% year over year but outpacing our projection of $28,440.8. The gross margin in the segment declined 50 bps to 6.8%.
Revenues from used-vehicle wholesale fell 17.3% to $242.9 million and missed our estimate of $370.5 million.
Revenues from service, body and parts were up 14.3% from the prior-year period’s levels to $818.3 million, outpacing our estimate of $756.4 million. The gross margin in the segment increased 110 bps to 55%.
The company’s finance and insurance revenues rose 7.5% to $331.5 million and exceeded our estimate of $300.7 million.
Revenues from fleet and others were $39.4 million, which plunged 68.5% year over year and missed our expectation of $98 million.
Same-store new-vehicle revenues increased 10.1% year over year and same-store used-vehicle retail sales declined 10.8%.
The same-store revenues from finance and insurance rose 1.5%, while that of the service, body and parts unit grew 2.7%.
Financial Tidbits
Cost of sales jumped 11.8% year over year in fourth-quarter 2023. SG&A expenses were $836.8 million, up 11.1% from $753.4 million in the year-ago quarter. Adjusted SG&A as a percentage of gross profit was 65.2%. Pretax and net profit margins declined from the year-ago levels.
The company approved a dividend of 50 cents per share, to be paid on Mar 22, 2024, to shareholders of record as of Mar 9, 2024. The company repurchased more than 142,700 shares at an average price of $240.81. As of Dec 31, 2023, Lithia had approximately $467 million shares remaining under its buyback authorization.
Lithia had cash/cash equivalents/restricted cash of $941.4 million as of Dec 31, 2023, up from $246.7 million as of Dec 31, 2022. Long-term debt was $5.5 billion as of Dec 31, 2023, up from $5.1 billion as of Dec 31, 2022.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -5.88% due to these changes.
VGM Scores
At this time, Lithia Motors has a poor Growth Score of F, 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 C. 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.
Performance of an Industry Player
Lithia Motors belongs to the Zacks Automotive - Retail and Whole Sales industry. Another stock from the same industry, Penske Automotive (PAG - Free Report) , has gained 0.2% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Penske reported revenues of $7.27 billion in the last reported quarter, representing a year-over-year change of +3.7%. EPS of $3.45 for the same period compares with $4.21 a year ago.
Penske is expected to post earnings of $3.44 per share for the current quarter, representing a year-over-year change of -20.2%. Over the last 30 days, the Zacks Consensus Estimate has changed +2.9%.
Penske has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.