A month has gone by since the last earnings report for Lithia Motors (LAD - Free Report) . Shares have lost about 31% 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 its most recent earnings report in order to get a better handle on the important drivers.
Lithia Motors Q4 Earnings & Sales Rise Y/Y
Lithia Motors reported adjusted earnings per share of $2.95 in fourth-quarter 2019, marking a 15% increase from the prior-year quarter’s $2.57. However, the bottom line missed the Zacks Consensus Estimate of $3.08. Lower-than-anticipated revenues from new-vehicle retail and used-vehicle wholesale businesses led to the underperformance.
Total revenues grew 9.9% year over year to $3,269 million. The figure also outpaced the Zacks Consensus Estimate of $3,256 million. Total same-store sales grew 7% year over year .Gross profit rose 12.8% to $498.6 million in the reported quarter from $441.9 million in the year-ago quarter.
Revenues from new-vehicle retail grew 7% year over year to $1,805.8 million but missed the Zacks Consensus Estimate of $1,832 million. New-vehicle retail units sold increased 2.6% to 46,422. The average selling price of new-vehicle retail rose 4.3% year over to year to $38,884.
Used-vehicle retail revenues rose 18.8% year over year to $894.7 million. Revenues from used-vehicle wholesale declined 13.3% year over year to $67.7 million and also missed the consensus mark of $81 million. Used-vehicle retail units sold grew 17.8% to 42,740. The average selling price of used-vehicle retail improved 0.8% to $20,934 from the year-ago figure of $20,771.
Revenues from service, body and parts went up 5.7% to $331.8 million. The company’s F&I business recorded 20.6% growth in revenues to $136 million. Revenues from fleet and others were $33 million, up 23.6% year over year.
Dividend & Financial Position
Lithia Motors’ board approved a dividend of 30 cents per share for fourth-quarter 2019. The amount will be payable Mar 27 to shareholders of record as of Mar 13, 2020.
Lithia Motors had cash and cash equivalents of $84 million as of Dec 31, 2019, down from $31.6 million as of Dec 31, 2018. Long-term debt was $1.43 billion as of Dec 30, 2019, marking an increase from $1.36 billion recorded as of Dec 31, 2018. Debt-to-capital ratio stands at 49%.
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 -12.7% due to these changes.
At this time, Lithia Motors has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Lithia Motors has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.