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Lithia (LAD) Q3 Earnings Miss Estimates, Revenues Beat

Lithia Motors LAD reported adjusted earnings of $9.25 per share in third-quarter 2023, which declined from the prior-year quarter’s $11.08 and missed the Zacks Consensus Estimate of $9.97 per share.

Total revenues jumped 13.5% year over year to $8,277 million, outpacing the Zacks Consensus Estimate of $8,151 million.

Lithia Motors, Inc. Price, Consensus and EPS Surprise

Lithia Motors, Inc. Price, Consensus and EPS Surprise
Lithia Motors, Inc. Price, Consensus and EPS Surprise

Lithia Motors, Inc. price-consensus-eps-surprise-chart | Lithia Motors, Inc. Quote

Segmental Performance

New vehicle retail revenues increased 17.5% year over year to $3,885.8 million, surpassing our estimate of $3,735 million due to an increase in the number of units sold.

New vehicle units sold rose 18.1% from the prior-year quarter’s levels to 82,188 units, beating our estimate of 76,965 units.

The average selling price of new-vehicle retail decreased to $47,279 from $47,531 reported in the prior-year quarter, missing our estimate of $48,528. However, the gross margin in this segment contracted 300 basis points (bps) to 9.2% amid high cost of sales, which flared up 21.5% year over year to $3,526.9 million and crossed our projection of $3,388 million.

Used-vehicle retail revenues rose 6.3% year over year to $2,620.2 million and outpaced our estimate of $2,491.6 million. A higher-than-expected number of units sold resulted in sales outperformance.

The used-vehicle retail units sold rose 9.2% from the year-ago quarter to 88,625 units, outpacing our expectation of 83,368 units. The average selling price of used-vehicle retail was $29,565, dropping 2.7% year over year and missing our projection of $29,886.7. The gross margin in the segment came down 100 bps to 7.2%.

Revenues from used-vehicle wholesale fell 13% to $316.1 million and missed our estimate of $391.8 million.

Revenues from service, body and parts were up 17.7% from the prior-year period’s levels to $838 million, outpacing our estimate of $782.5 million. The gross margin in the segment increased 120 bps to 55.2%.

The company’s finance and insurance revenues rose 4.8% to $349.4 million but missed our estimate of $351.1 million.

Revenues from fleet and others were $267.5 million, up 134% year over year, outpacing our expectation of $95.7 million.

Same-store new-vehicle revenues increased 5.5% year over year and same-store used-vehicle retail sales declined 8.1%.

The same-store revenues from finance and insurance dipped by 3.3%, while that of the service, body and parts unit grew by 4.3%.

Financial Tidbits

Cost of sales jumped 15.5% year over year in third-quarter 2023. SG&A expenses were $850.8 million, up 12.8% from $754.2 million in the year-ago quarter. Adjusted SG&A as a percentage of gross profit was 62.7%. Pretax and net profit margins declined from the year-ago levels.

The company approved a dividend of 50 cents per share, which is to be paid on Nov 17, 2023, to shareholders of record on Nov 10, 2023.

Lithia had cash/cash equivalents/restricted cash of $256.2 million as of Sep 30, 2023, up from $246.7 million as of Dec 31, 2022. Long-term debt was $5,152.8 million as of Sep 30, 2023, up from $5,088.3 million as of Dec 31, 2022.

Zacks Rank & Key Picks

LAD currently carries a Zacks Rank #3 (Hold).

Some top-ranked players in the auto space are Toyota Motor TM, Honda Motor HMC and Allison Transmission Holdings ALSN. While TM and HMC sport a Zacks Rank #1 (Strong Buy), ALSN carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for TM’s 2023 sales and earnings implies year-over-year growth of 10.6% and 27.6%, respectively. The EPS estimates for 2023 and 2024 have increased by 18 cents and 37 cents, respectively, in the past seven days.

The Zacks Consensus Estimate for HMC’s 2023 sales and earnings suggests year-over-year improvements of 7.7% and 29.4%, respectively. The EPS estimates for 2023 and 2024 have moved up by 4 cents each in the past seven days.

The Zacks Consensus Estimate for ALSN’s 2023 sales and earnings indicates year-over-year rises of 9.6% and 26.8%, respectively. The EPS estimate for 2023 increased by a cent in the past seven days. The EPS estimate for 2024 increased by 32 cents in the past 30 days.

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Toyota Motor Corporation (TM) : Free Stock Analysis Report

Honda Motor Co., Ltd. (HMC) : Free Stock Analysis Report

Allison Transmission Holdings, Inc. (ALSN) : Free Stock Analysis Report

Lithia Motors, Inc. (LAD) : Free Stock Analysis Report

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