Lithia Motors (LAD) to Report Q4 Earnings: What to Expect?
Lithia Motors Inc. LAD is set to report fourth-quarter 2015 results on Feb 24. In the last quarter, the company delivered a positive earnings surprise of 12.15%. Let us see how things are shaping up for this announcement.
Factors Influencing this Quarter
Lithia Motors expects earnings in the range of $1.61–$1.65 per share for the fourth quarter of 2015, higher than $1.42 recorded in fourth-quarter 2014. For 2015, the company projects earnings in the band of $6.89–$6.93 per share, higher than $5.11 recorded in 2014. The company anticipates revenues between $7.8 billion and $7.9 billion for 2015, up from $5.39 billion recorded in 2014. For 2015, revenues will likely benefit from an expected 48% increase in new vehicle sales and a 41% rise in used vehicle sales. Sales from service body and parts will likely increase 44%.
However, Lithia Motors competes with publicly and privately-owned dealerships, along with Internet-based vehicle brokers. Rising competition and increasing price transparency can lead to lower selling prices, thus affecting the company’s profits. In addition, Lithia Motors depends on automakers for the supply of vehicles. Any fluctuation in supply or production can adversely affect sales and thus, the company’s financial performance.
Earnings Whispers
Our proven model does not conclusively show that Lithia Motors is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: The Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. Lithia Motors has an Earnings ESP of -1.83% because the Most Accurate estimate stands at $1.61, while the Zacks Consensus Estimate is pegged at $1.64.
Zacks Rank: Lithia Motors’ Zacks Rank #3 (Hold) increases the predictive power of ESP. However, we need to have a positive ESP to be confident about an earnings surprise.
We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Superior Industries International, Inc. SUP has an Earnings ESP of +1.11% and a Zacks Rank #1 (Strong Buy). The company is expected to release fourth-quarter and full-year 2015 earnings results on Mar 7.
Visteon Corporation VC has an Earnings ESP of +22.73% and a Zacks Rank #1. The company is expected to release fourth-quarter and full-year 2015 earnings results on Feb 25.
Magna International Inc. MGA has an Earnings ESP of +1.77% and a Zacks Rank #3. The company is expected to release fourth-quarter and full-year 2015 earnings results on Feb 26.
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LITHIA MOTORS (LAD): Free Stock Analysis Report
SUPERIOR INDS (SUP): Free Stock Analysis Report
MAGNA INTL CL A (MGA): Free Stock Analysis Report
VISTEON CORP (VC): Free Stock Analysis Report
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