A month has gone by since the last earnings report for Lithia Motors (LAD Quick QuoteLAD - Free Report) . Shares have lost about 8.4% 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 latest earnings report in order to get a better handle on the important catalysts.

Lithia Q2 Earnings Top Estimates

Lithia posted second-quarter 2026 adjusted earnings of $10.03 per share, which increased 9% from $9.20 a year ago. The bottom line beat the Zacks Consensus Estimate of $8.67 by 15.7%.

Quarterly revenues increased 2.2% year over year to $9.79 billion and topped the consensus estimate of $9.64 billion by 1.6%. Improved used-vehicle profitability, aftersales growth and record Financing Operations income supported the results. Driveway Finance Corporation generated record originations of $884 million.

Revenue Growth Spans Core Business Lines

New-vehicle revenues rose 2.7% year over year to $4,829.2 million, while used-vehicle revenues increased 1.4% to $3,528.3 million. Aftersales revenues advanced 3.9% to $1,067.4 million.

Finance and insurance revenues declined 2% to $366.4 million. Same-store new-vehicle revenues fell 1.5%, while same-store used-vehicle revenues decreased 2.2%, showing that acquisitions contributed to the consolidated growth in both categories.

Used Vehicle Profitability Improves

New-vehicle unit sales increased 2.7% to 104,089 units. Used retail unit sales declined 2.7% to 106,114 units, but the used retail average selling price rose 4.3% to $29,593.

Used-vehicle gross profit increased 4.2% to $214 million. Used retail gross profit per unit climbed 5.4% to $2,014, and the used-vehicle gross margin expanded 20 basis points to 6.1%. By contrast, new-vehicle gross profit per unit fell 11.8% to $2,728 as the new-vehicle margin contracted 80 basis points to 5.9%.

Aftersales Business Supports the Profit Mix

Aftersales gross profit increased 6.8% year over year to $633 million. Its gross margin expanded 160 basis points to 59.3%, reinforcing the importance of recurring service and repair activity to overall profitability.

Aftersales accounted for 42.2% of total gross profit, up from 39.9% a year earlier. Total gross profit increased 0.8% to $1,497.4 million, although the consolidated gross margin narrowed 20 basis points to 15.3%.

Cost Control Lifts Operating Income

Selling, general and administrative expenses were unchanged year over year at $1,014.7 million. Lower personnel and other costs offset higher advertising, rent and facility expenses.

Reported SG&A as a percentage of gross profit improved 50 basis points to 67.8%. Income from operations increased 5.4% to $448.3 million, while depreciation and amortization rose 8.7% to $70.9 million. Floor plan interest expense increased 26.7% to $69.7 million, partly tempering the operating improvement.

Financing Operations Reach Record Income

Financing Operations income surged 81.6% to $36.5 million. Interest and fee income increased to $116.4 million from $98.8 million, while the total interest margin expanded to 4.8% from 4.5%.

DFC’s penetration rate was 17.5%, and the average FICO score on originated loans was 749. Managed finance receivables reached nearly $5.3 billion, up 23% year over year, supporting a larger stream of interest income. More than 99% of the portfolio was less than 60 days past due.

Balance Sheet Reflects Finance Growth

As of June 30, 2026, cash, restricted cash and cash equivalents totaled $363.9 million, up from $341.8 million as of Dec. 31, 2025. Inventories increased to $6,516.8 million from $6,119.6 million at year-end 2025, while total floor plan debt rose to $6,387.4 million from $5,008.9 million.

For the first six months of 2026, net cash used in operating activities was $174.1 million, reflecting increases in inventories and finance receivables. Capital expenditures totaled $153.4 million, and cash paid for acquisitions was $221.7 million. Available liquidity was approximately $1.3 billion.

Capital Returns

During the quarter, LAD repurchased roughly 854,000 shares at a weighted average price of $284, representing $242 million of share repurchases. Approximately $620 million remained under the authorization at quarter-end.

The board increased the quarterly dividend 23% to 70 cents per share.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in estimates revision.

The consensus estimate has shifted 8.7% due to these changes.

VGM Scores

Currently, Lithia Motors has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock has a grade of B on the value side, putting it in the top 40% for value investors.

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 trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Lithia Motors has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.