U.S. Markets close in 3 hrs 48 mins
  • S&P 500

    +7.77 (+0.20%)
  • Dow 30

    +75.32 (+0.24%)
  • Nasdaq

    -21.92 (-0.17%)
  • Russell 2000

    -13.09 (-0.59%)
  • Crude Oil

    +3.21 (+5.24%)
  • Gold

    -2.40 (-0.14%)
  • Silver

    -0.16 (-0.61%)

    -0.0026 (-0.2167%)
  • 10-Yr Bond

    +0.0060 (+0.41%)
  • Vix

    -1.20 (-4.50%)

    +0.0040 (+0.2883%)

    +0.6700 (+0.6262%)

    -1,242.16 (-2.43%)
  • CMC Crypto 200

    +12.18 (+1.23%)
  • FTSE 100

    -24.59 (-0.37%)
  • Nikkei 225

    -628.99 (-2.13%)

Will Lithia Motors (LAD) Beat Estimates Again in Its Next Earnings Report?

  • Oops!
    Something went wrong.
    Please try again later.
Zacks Equity Research
·3 min read
  • Oops!
    Something went wrong.
    Please try again later.

Looking for a stock that has been consistently beating earnings estimates and might be well positioned to keep the streak alive in its next quarterly report? Lithia Motors (LAD), which belongs to the Zacks Automotive - Retail and Whole Sales industry, could be a great candidate to consider.

When looking at the last two reports, this auto dealership chain has recorded a strong streak of surpassing earnings estimates. The company has topped estimates by 73.94%, on average, in the last two quarters.

For the most recent quarter, Lithia Motors was expected to post earnings of $1.51 per share, but it reported $3.72 per share instead, representing a surprise of 146.36%. For the previous quarter, the consensus estimate was $1.98 per share, while it actually produced $2.01 per share, a surprise of 1.52%.

Price and EPS Surprise

Thanks in part to this history, there has been a favorable change in earnings estimates for Lithia Motors lately. In fact, the Zacks Earnings ESP (Expected Surprise Prediction) for the stock is positive, which is a great indicator of an earnings beat, particularly when combined with its solid Zacks Rank.

Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better produce a positive surprise nearly 70% of the time. In other words, if you have 10 stocks with this combination, the number of stocks that beat the consensus estimate could be as high as seven.

The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a version of the Zacks Consensus whose definition is related to change. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier.

Lithia Motors has an Earnings ESP of +28.93% at the moment, suggesting that analysts have grown bullish on its near-term earnings potential. When you combine this positive Earnings ESP with the stock's Zacks Rank #1 (Strong Buy), it shows that another beat is possibly around the corner.

When the Earnings ESP comes up negative, investors should note that this will reduce the predictive power of the metric. But, a negative value is not indicative of a stock's earnings miss.

Many companies end up beating the consensus EPS estimate, though this is not the only reason why their shares gain. Additionally, some stocks may remain stable even if they end up missing the consensus estimate.

Because of this, it's really important to check a company's Earnings ESP ahead of its quarterly release to increase the odds of success. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Lithia Motors, Inc. (LAD) : Free Stock Analysis Report
To read this article on Zacks.com click here.