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LKQ (LKQ) Up 1.5% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for LKQ (LKQ - Free Report) . Shares have added about 1.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is LKQ due for a pullback? 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.
LKQ Q1 Earnings Miss Estimates, Decline Y/Y, Guidance Revised
LKQ delivered adjusted earnings of 82 cents per share for first-quarter 2024, which missed the Zacks Consensus Estimate of 94 cents and decreased from $1.04 reported in the year-ago period.
The aftermarket auto parts distributor registered quarterly revenues of $3.7 billion, missing the Zacks Consensus Estimate of $3.79 billion. The top line, however, grew from the year-ago level of $3.35 billion. Parts and services organic revenues decreased 0.3% year over year.
Segment Highlights
In the reported quarter, revenues from the Wholesale North American segment totaled $1.5 billion, rising 22% year over year but missing our estimate of $1.54 billion. The segment’s EBITDA was $244 million, which was slightly above our forecast of $243.7 million but lower than $252 million generated in the first quarter of 2023.
Revenues from the European segment were $1.64 billion, which increased 5.7% year over year but missed our estimate of $1.71 billion. The segment’s EBITDA came in at $143 million, which decreased from the year-ago level of $151 million and missed our forecast of $152.4 million.
Revenues from the Specialty segment came in at $423 million, rising 6.5% year over year and beating our projection of $401.4 million. The segment’s EBITDA was $27 million, which declined from the year-ago figure of $31 million and missed our forecast of $33.1 million.
Revenues from the Self-Service segment totaled $137 million, down 18.9% year over year. The metric also missed our prediction of $141.6 million. The segment’s EBITDA was $16 million, which outpaced our estimate of $8.5 million but declined from $22 million reported in the year-ago period.
Financial Position & Dividend
LKQ had cash and cash equivalents of $344 million as of Mar 31, 2024, up from $299 million recorded as of Dec 31, 2023. The long-term obligations (excluding the current portion) amounted to $4.16 billion as of Mar 31, 2024, up from $3.65 billion recorded as of Dec 31, 2023. As of Mar 31, 2024, LKQ’s balance sheet reflected a total debt of $4.3 billion.
During the first quarter of 2024, cash flow provided by operating activities totaled $253 million. The company recorded a positive free cash flow of $187 million.
During the first quarter of 2024, the company repurchased 0.6 million shares worth $30 million. In the period between initiating the stock buyback program in late October 2018 and Mar 31, 2024, it repurchased around 57 million shares for a total of $2.5 billion.
On Apr 22, 2024, LKQ announced a quarterly cash dividend of 30 cents per share. The dividend will be paid out on May 30, 2024, to stockholders of record at the close of business on May 16, 2024.
Revised 2024 Guidance
For full-year 2024, the company now expects organic revenue growth for parts and services to increase 2.5-4.5% year over year, down from the previous guided range of 3.5-5.5%. It now expects diluted earnings per share (EPS) in the range of $3.32-$3.62, down from the previous guidance of $3.43-$3.73. The company’s estimates for adjusted diluted EPS, operating cash flow and free cash flow have remained unchanged at $3.90-$4.20, $1.35 billion and $1 billion, respectively.
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 -6.33% due to these changes.
VGM Scores
Currently, LKQ has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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 indicates a downward shift. Notably, LKQ has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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LKQ (LKQ) Up 1.5% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for LKQ (LKQ - Free Report) . Shares have added about 1.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is LKQ due for a pullback? 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.
LKQ Q1 Earnings Miss Estimates, Decline Y/Y, Guidance Revised
LKQ delivered adjusted earnings of 82 cents per share for first-quarter 2024, which missed the Zacks Consensus Estimate of 94 cents and decreased from $1.04 reported in the year-ago period.
The aftermarket auto parts distributor registered quarterly revenues of $3.7 billion, missing the Zacks Consensus Estimate of $3.79 billion. The top line, however, grew from the year-ago level of $3.35 billion. Parts and services organic revenues decreased 0.3% year over year.
Segment Highlights
In the reported quarter, revenues from the Wholesale North American segment totaled $1.5 billion, rising 22% year over year but missing our estimate of $1.54 billion. The segment’s EBITDA was $244 million, which was slightly above our forecast of $243.7 million but lower than $252 million generated in the first quarter of 2023.
Revenues from the European segment were $1.64 billion, which increased 5.7% year over year but missed our estimate of $1.71 billion. The segment’s EBITDA came in at $143 million, which decreased from the year-ago level of $151 million and missed our forecast of $152.4 million.
Revenues from the Specialty segment came in at $423 million, rising 6.5% year over year and beating our projection of $401.4 million. The segment’s EBITDA was $27 million, which declined from the year-ago figure of $31 million and missed our forecast of $33.1 million.
Revenues from the Self-Service segment totaled $137 million, down 18.9% year over year. The metric also missed our prediction of $141.6 million. The segment’s EBITDA was $16 million, which outpaced our estimate of $8.5 million but declined from $22 million reported in the year-ago period.
Financial Position & Dividend
LKQ had cash and cash equivalents of $344 million as of Mar 31, 2024, up from $299 million recorded as of Dec 31, 2023. The long-term obligations (excluding the current portion) amounted to $4.16 billion as of Mar 31, 2024, up from $3.65 billion recorded as of Dec 31, 2023. As of Mar 31, 2024, LKQ’s balance sheet reflected a total debt of $4.3 billion.
During the first quarter of 2024, cash flow provided by operating activities totaled $253 million. The company recorded a positive free cash flow of $187 million.
During the first quarter of 2024, the company repurchased 0.6 million shares worth $30 million. In the period between initiating the stock buyback program in late October 2018 and Mar 31, 2024, it repurchased around 57 million shares for a total of $2.5 billion.
On Apr 22, 2024, LKQ announced a quarterly cash dividend of 30 cents per share. The dividend will be paid out on May 30, 2024, to stockholders of record at the close of business on May 16, 2024.
Revised 2024 Guidance
For full-year 2024, the company now expects organic revenue growth for parts and services to increase 2.5-4.5% year over year, down from the previous guided range of 3.5-5.5%. It now expects diluted earnings per share (EPS) in the range of $3.32-$3.62, down from the previous guidance of $3.43-$3.73. The company’s estimates for adjusted diluted EPS, operating cash flow and free cash flow have remained unchanged at $3.90-$4.20, $1.35 billion and $1 billion, respectively.
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 -6.33% due to these changes.
VGM Scores
Currently, LKQ has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% 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 indicates a downward shift. Notably, LKQ has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.