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Lithia Motors (LAD) Q4 Earnings & Revenues Beat Estimates

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Lithia Motors Inc. (LAD - Free Report) reported adjusted earnings per share of $2.15 in fourth-quarter 2017, increasing from $1.86 in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate of $2.10.

Reportedly, adjusted net income rose 15% to $54 million from $47 million in the year-ago quarter.

Revenues in the reported quarter were $2.7 billion, up from $2.3 billion in the year-ago quarter. The top line surpassed the Zacks Consensus Estimate of $2.68 billion.

Lithia Motors, Inc. Price, Consensus and EPS Surprise

Revenues from new vehicle retail rallied 21% to $1.62 billion in the quarter. New vehicle retail sales volume expanded 17.3% to 45,202 units.

Used vehicle retail revenues increased 12.4% to $629.3 million in the quarter, whereas revenues from used vehicle wholesale increased 2.3% to $71.1 million. Used vehicle retail sales volume improved 12.3% to 32,242 units.

Revenues from service body and parts went up 18.9% to $271.5 million. The company’s finance and insurance business recorded a 22.1% rise in revenues to $103.2 million. Revenues from fleet and others surged 32.7% to $15.19 million.

Gross profit climbed 18.3% to $396 million in the reported quarter, from $334.8 million in the year-ago quarter.

Fiscal 2017 Results

Lithia Motors reported adjusted earnings of $8.39 per share in fiscal 2017, up from $7.42, earned in fiscal 2016. The Zacks Consensus Estimate for the metric was $8.34.

Adjusted net income increased to $211 million from $189 million a year ago. Consolidated revenues were $10.1 billion, which was almost in line with the Zacks Consensus Estimate. The top line exceeded the year-ago figure of $8.7 billion.

Segment Details

Domestic segment revenues jumped 10.9% to $982.8 million on a 10.8% rise in retail new vehicle unit sales to 13,881 automobiles. However, the segment’s income declined 4.7% to $20.8 million in the quarter under review.

Import segment revenues shot up 17.1% to $1.2 billion on a 17.9% rise in retail new vehicle unit sales to 24,991 automobiles. Segment income increased 13.2% to $26.4 million in the reported quarter.

Revenues at the Luxury segment rose 35% to $563.6 million. Retail new vehicle sales increased 30.6% to 6,429 luxury vehicles. The segment’s income rose 48.8% to $14.5 million in the quarter.

Acquisition

In fourth-quarter 2017, the company completed the acquisition of Armory Chrysler Jeep Dodge Ram in Albany, NY and Crater Lake Ford Lincoln and Crater Lake Mazda in Medford, OR. In fiscal 2017, Lithia Motors acquired 18 stores and opened one.

Also, last month, the company completed the acquisition of Ray Laks Honda and Ray Laks Acura in Orchard Park and Buffalo, NY, respectively. The two stores are anticipated to add $140 million in annualized revenue.

Financial Details

Lithia Motors had cash and cash equivalents of $57.3 million as of Dec 31, 2017, down from $50.3 million as of Dec 31, 2016. Long-term debt was $1.03 billion as of Dec 31, 2017, compared with $769.9 million as of Dec 31, 2016.

Dividend

Lithia Motors announced a quarterly dividend of 27 cents per share, expectedly payable on Mar 2, 2018, to shareholders of record as of Mar 9, 2018.

Outlook

In 2018, Lithia Motors raised the anticipated earnings to $10.5 per share, an increase from the prior expectation of $9.25. Further, the company reiterated revenues expectation in the range $11-$11.5 billion.

Zacks Rank & Stocks to Buy

Lithia Motors has a Zacks Rank #2 (Buy). Other top-ranked stocks in the auto space include PACCAR Inc. (PCAR - Free Report) , Cummins Inc. (CMI - Free Report) and Lear Corporation (LEA - Free Report) , each carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

PACCAR has an expected long-term growth rate of 10%. The company’s stock has seen the Zacks Consensus Estimate for quarterly earnings being revised 12.2% upward over the last 30 days.

Cummins has an expected long-term growth rate of 11.4%. The company’s stock has seen the Zacks Consensus Estimate for quarterly earnings being revised 0.7% upward over the last seven days.

Lear Corp. has an expected long-term growth rate of 7.1%. The company’s stock has seen the Zacks Consensus Estimate for quarterly earnings being revised 0.8% upward over the last seven days.

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