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Lithia Motors (LAD) Dips More Than Broader Markets: What You Should Know

Zacks Equity Research

In the latest trading session, Lithia Motors (LAD) closed at $237.03, marking a -1.75% move from the previous day. This change lagged the S&P 500's 0.46% loss on the day. Elsewhere, the Dow gained 0.13%, while the tech-heavy Nasdaq lost 1.25%.

Heading into today, shares of the auto dealership chain had lost 11.76% over the past month, lagging the Retail-Wholesale sector's gain of 2.5% and the S&P 500's gain of 1% in that time.

Investors will be hoping for strength from LAD as it approaches its next earnings release. In that report, analysts expect LAD to post earnings of $4.05 per share. This would mark year-over-year growth of 19.47%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $3.48 billion, up 4.53% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $13.82 per share and revenue of $12.53 billion. These totals would mark changes of +17.52% and -1.13%, respectively, from last year.

Investors should also note any recent changes to analyst estimates for LAD. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Over the past month, the Zacks Consensus EPS estimate has moved 1.17% higher. LAD is holding a Zacks Rank of #1 (Strong Buy) right now.

In terms of valuation, LAD is currently trading at a Forward P/E ratio of 17.46. Its industry sports an average Forward P/E of 11.86, so we one might conclude that LAD is trading at a premium comparatively.

The Automotive - Retail and Whole Sales industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 2, which puts it in the top 1% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.

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