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LKQ Earnings Drive Past Estimates in Q1, Revenues Miss Mark

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LKQ Corporation’s (LKQ - Free Report) first-quarter 2019 adjusted earnings were 56 cents per share, which rose 2% from 55 cents recorded in the prior-year quarter. Further, the figure surpassed the Zacks Consensus Estimate of 55 cents. Improvement in North America gross margin along with pricing initiatives to offset inflationary pressures aided year-over-year earnings growth.

Adjusted net income was $176 million, marking 4% rise from $170 million recorded in the same period of 2018.

In the first quarter, revenues rose 14% to $3.1 billion from $2.7 billion a year ago. However, the figure narrowly missed the Zacks Consensus Estimate of $3.17 billion. The company witnessed 0.1% organic revenue growth in parts and services while acquisition revenue growth was 18.3%.

LKQ Corporation Price, Consensus and EPS Surprise

 

Financial Position

LKQ had cash and cash equivalents of $316 million as of Mar 31, 2019, compared with $332 million as of Dec 31, 2018.

At the end of first-quarter 2019, the company had net cash provided by operating activities of $177 million compared with $145 million as of Dec 31, 2018. Free cash flow improved 50% year over year to $124 million.

Share Buyback

During the quarter under review, LKQ repurchased roughly 2.6 million shares for $70 million at average price of $26.66. Since the initiation of share repurchase in October 2018, the company has bought back 4.9 million shares for $130 million.

2019 Outlook

For 2019, LKQ lowered the projection for earnings per share to $1.87-$2.00 compared with previously mentioned $2.05-$2.17. However, organic revenue growth projection for parts & services remained unchanged at 2-4%. Further, adjusted net income was unaltered at $732-$771 million.

Zacks Rank & Stocks to Consider

LKQ currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader auto sector are AB Volvo (VLVLY - Free Report) , PACCAR Inc. (PCAR - Free Report) and Fox Factory Holding Corporation (FOXF - Free Report) , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Volvo has an expected long-term growth rate of 5%. The stock has gained 16.7% in the past three months.

PACCAR has an expected long-term growth rate of 8.4%. The stock has gained 14% in the past three months.

Fox Factory has an expected long-term growth rate of 15.1%. Over the past three months, shares of the company have gained 27.9%.

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LKQ Corporation (LKQ) - free report >>