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LKQ (LKQ) Up 2.5% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for LKQ (LKQ - Free Report) . Shares have added about 2.5% in that time frame, outperforming 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 Q4 Earnings and Revenues Miss Estimates, Improve Y/Y

LKQ Corp fourth-quarter 2018 adjusted earnings from continuing operations were 48 cents per share, missing the Zacks Consensus Estimate of 49 cents. The bottom line improved from the prior-year quarter’s 41 cents. Adjusted net income from continuing operations was $151.3 million compared with $126.4 million in the year-ago quarter.

In the fourth quarter, total revenues rose 21.6% to $3 billion from $2.47 billion a year ago. Its lightly missed the Zacks Consensus Estimate of $3.01 billion. The company witnessed 4.4% organic revenue growth in Parts and Services.

2018 Results

In 2018, LKQ Corp’s earnings were $2.19, up from $1.88 in 2017.

In the same year, the company’s revenues were $11.9 billion, up 22% from the 2017 figure.

Business Developments

On Nov 26, 2018, LKQ Corp reset its credit facility to $3.5 billion.

In fourth-quarter 2018, the company acquired three wholesale businesses in North America and two wholesale businesses in Europe for around 14 million. Its European operations opened five branches in eastern Europe.

Financial Position

LKQ Corp had cash and cash equivalents of $337.3 million as of Dec 31, 2018, compared with $279.8 million as of Dec 31, 2017.

For the year ended Dec 31, 2018, the company had net cash provided by operating activities of around $710.7 million.

2019 Outlook

For 2019, LKQ Corp expects organic revenue growth of 2-4%for parts & services.

Further, adjusted net income from continuing operations is expected to be $732-$771 million. Adjusted earnings per share from continuing operations in 2019 are expected to be $2.34-$2.46.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -7.53% due to these changes.

VGM Scores

Currently, LKQ has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. 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. It's no surprise LKQ has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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