It has been about a month since the last earnings report for Lithia Motors (LAD - Free Report) . Shares have added about 3.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Lithia Motors due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Lithia Motors Q3 Earnings & Sales Top Estimates, Up Y/Y
Lithia Motors, Inc. reported adjusted earnings per share of $3.39 in third-quarter 2019, marking a 20% increase from the prior-year quarter’s $2.83. Further, the bottom line beat the Zacks Consensus Estimate of $3.14. The upside in earnings stemmed from strong gains across all business lines. In the reported quarter, adjusted net income rose 16% year over year to $79 million.
Total revenues grew 8% year over year to $3.3 billion. The figure also outpaced the Zacks Consensus Estimate of $3.24 billion. Total same-store sales grew 7.6% year over year to $3,249.7 million.
Gross profit rose 9.6% to $510.9 million in the reported quarter from $466.2 million in the year-ago quarter.
Revenues from new-vehicle retail grew 5.3% year over year to $1.82 billion. New-vehicle retail units sold declined 0.6% to 48,508. The average selling price of new-vehicle retail rose 5.9% year over to year to $37,618.
Used-vehicle retail revenues rose 13.7% year over year to $916.3 million. Revenues from used-vehicle wholesale declined 19.1% year over year to $74.4 million. Used-vehicle retail units sold grew 11% to 44,143. The average selling price of used-vehicle retail improved 2.4% to $20,756 from the year-ago figure of $20,274.
Revenues from service, body and parts went up 9.4% to $340.5 million. The company’s F&I business recorded 12.6% growth in revenues to $136.3 million. Revenues from fleet and others were $40.1 million, up 39.7% year over year.
Lithia Motors had cash and cash equivalents of $27.1 million as of Sep 30, 2019, down from $31.6 million as of Dec 31, 2018. Long-term debt was $1.29 billion as of Sep 30, 2019, marking a decline from $1.36 billion recorded as of Dec 31, 2018.
Lithia Motors’ board approved a dividend of 30 cents per share for third-quarter 2019. The amount will be payable Nov 22 to shareholders of record as of Nov 8, 2019.
Earlier this month, the company acquired John Howard Subaru, Waterfront Jeep and Urse Chrysler Dodge Ram Fiat in Morgantown, WV. So far this year, Lithia Motors has acquired seven stores. These are expected to generate revenues of more than $475 million. Recently, the company activated proprietary technology in the Pittsburgh market. These scalable, digital solutions are expected to drive improvements and efficiencies across Lithia Motors’ network.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 8.05% due to these changes.
Currently, Lithia Motors has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top 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.
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Lithia Motors has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.