Factors at Play Ahead of Lithia's (LAD) Q4 Earnings Release
Lithia Motors LAD is slated to release fourth-quarter 2021 results on Feb 9, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings and revenues is pegged at $9.99 per share and $6.32 billion, respectively.
The auto retailer came up with better-than-expected results in the last reported quarter, primarily on higher-than-anticipated used-vehicle sales. In fact, Lithia surpassed earnings estimates in the last four quarters, with the average being 29.1%. This is depicted in the graph below:
Lithia Motors, Inc. Price and EPS Surprise
Lithia Motors, Inc. price-eps-surprise | Lithia Motors, Inc. Quote
Trend in Estimate Revisions
The Zacks Consensus Estimate for fourth-quarter earnings per share has moved 12 cents north in the past 30 days. The metric indicates a significant year-over-year jump of 83%. Further, the Zacks Consensus Estimate for quarterly revenues suggests year-over-year growth of 60.3%.
Earnings Whispers
Our proven model predicts an earnings beat for Lithia this time around as well. 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, which is the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +5.18%. This is because the Most Accurate Estimate for earnings per share is pegged 52 cents higher than the Zacks Consensus Estimate.
Zacks Rank: Lithia currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Things to Note
Courtesy of economic recovery from the pandemic lows and preference for personal mobility, demand for vehicles has been on the rise, which is likely to have aided sales of Lithia. Encouragingly, the auto retailer is expected to post a year-over-year increase in fourth-quarter revenues across all units. A spree of strategic buyouts is expected to have enhanced Lithia’s product portfolio and market share. Also, we expect Lithia’s Driveway e-commerce program to have significantly buoyed the firm’s fourth-quarter revenues. More importantly, the rising average selling price for new and used cars amid supply-demand mismatch is likely to have fueled revenues.
The Zacks Consensus Estimate for revenues in the used vehicle business is $2,276 million, indicating a significant increase from $1,201 million recorded in the year-ago period. The consensus mark for revenues from the new vehicle segment stands at $2,930 million, suggesting 36.3% year-over-year growth. The Zacks Consensus Estimate for revenues from Finance & Insurance and Fleet & Other is pegged at $294 million and $42.65 million, implying a year-over-year improvement of 70% and 52.5%, respectively.
Higher year-over-year projected gross margins for used vehicle retail also augur well. The consensus mark for fourth-quarter 2021 gross margins in the used vehicle retail segment is pegged at 11.3%, signaling an increase from 10.2% recorded in the corresponding period of 2020.
Other Stocks With Favorable Combination
Here are a few other auto retailers, which, according to our model, also have the right combination of elements to post an earnings beat for the quarter to be reported:
Penske Automotive PAG has an Earnings ESP of +9.27% and a Zacks Rank #2. The company is set to report fourth-quarter 2021 earnings on Feb 19.
The Zacks Consensus Estimate for Penske’s to-be-reported quarter’s earnings and revenues is pegged at $3.62 per share and $6.31 billion, respectively. Encouragingly, PAG surpassed earnings estimates in the last four quarters, with an average of 20.3%.
Group 1 Automotive GPI has an Earnings ESP of +0.63% and a Zacks Rank #2. The company is set to report fourth-quarter 2021 earnings on Feb 10.
The Zacks Consensus Estimate for Group 1’s to-be-reported quarter’s earnings and revenues is pegged at $9.06 per share and $3.48 billion, respectively. GPI surpassed earnings estimates in three of the last four quarters and missed once, with an average of 7.96%.
Advance Auto Parts AAP has an Earnings ESP of +1.29% and a Zacks Rank #3. The stock is set to report fourth-quarter 2021 earnings on Feb 14.
The Zacks Consensus Estimate for Advance Auto’s to-be-reported quarter’s earnings and revenues is pegged at $1.95 per share and $2.35 billion, respectively. AAP surpassed earnings estimates in three of the last four quarters and missed once, with an average surprise of 9.01%.
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Penske Automotive Group, Inc. (PAG) : Free Stock Analysis Report
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