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What's in Store for Lithia Motors (LAD) This Earnings Season?

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Lithia Motors, Inc. (LAD - Free Report) is slated to release fourth-quarter 2019 results on Feb 12, before the opening bell.

The U.S.-based automotive retailer of new and used vehicles recorded better-than-anticipated results in the last reported quarter aided by solid gains across all business lines.

Lithia Motors surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 7.61%. This is depicted in the graph below:

Lithia Motors, Inc. Price and Consensus

Which Way are the Top- and Bottom-Line Estimates Headed?

The Zacks Consensus Estimate for fourth-quarter 2019 earnings per share of $3.08 moved up 2% over the past 30 days. It calls for a year-over-year increase of 19.84%. The consensus estimate for revenues of $3.26 billion suggests 9.6% growth from the prior-year quarter’s $2.97 billion.

What the Zacks Model Says?

Our proven model predicts an earnings beat for Lithia Motors this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Lithia Motors has an Earnings ESP of +9.83%.

Zacks Rank: Lithia Motors sports a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors that Might Have Influenced Q4 Performance

Enhanced digital solutions are anticipated to have boosted the company’s profits in the to-be-reported quarter. It activated proprietary technology in the Pittsburgh market which is anticipated to have driven improvements and efficiencies across Lithia Motors’ network. The company is also likely to have widened its omni-channel capabilities, in order to expand and modernize transportation solutions for customers.

With rising prices of new vehicles, customers are more inclined to purchase used vehicles. This is expected to have fortified the company’s used vehicle unit, which has been a major growth driver over the last several quarters as well.

With rapid growth in dealership purchases, Lithia Motors’ acquisitions are likely to have helped expand market share and cater to varied customer requirements in the quarter under review. The takeovers of Williams Automotive Group’s Honda and Toyota dealerships in Florida are worth a mention in this context.

Meanwhile, the quarter is expected to have witnessed a rise in SG&A expenses, primarily due to acquisition costs and insurance reserves, partially offset by store sales. This is likely to reflect on its net income results.

The company’s new-vehicle unit sales might have declined in the period under consideration, chiefly due to disrupted distribution of vehicles at stores in Northwest U.S. Also, huge availability of off-lease used vehicles in the market is likely to have partly resulted in this decline.

Other Stocks to Consider

Here are some other companies, which according to our model have the right combination of elements to post earnings beat in the fourth quarter.

LKQ Corporation (LKQ - Free Report) is scheduled to report fourth-quarter figures on Feb 20. The stock has an Earnings ESP of +1.68% and carries a Zacks Rank #3, currently.

Visteon Corporation (VC - Free Report) is set to release quarterly numbers on Feb 20. The company has an Earnings ESP of +2.63% and carries a Zacks Rank of 3, at present.

Agnico Eagle Mines Limited (AEM - Free Report) has an Earnings ESP of +0.47% and is a Zacks #3 Ranked player. The company is slated to report earnings results on Feb 13.

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