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Lithia Motors (LAD) Gains But Lags Market: What You Should Know

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In the latest trading session, Lithia Motors (LAD) closed at $293.52, marking a +0.96% move from the previous day. This move lagged the S&P 500's daily gain of 1.12%. At the same time, the Dow added 1.01%, and the tech-heavy Nasdaq lost 0.08%.

Heading into today, shares of the auto dealership chain had lost 10.84% over the past month, lagging the Retail-Wholesale sector's gain of 5.08% and the S&P 500's gain of 4.63% in that time.

Investors will be hoping for strength from Lithia Motors as it approaches its next earnings release, which is expected to be April 20, 2022. On that day, Lithia Motors is projected to report earnings of $9.63 per share, which would represent year-over-year growth of 63.5%. Our most recent consensus estimate is calling for quarterly revenue of $6.03 billion, up 38.88% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $40.60 per share and revenue of $26.3 billion. These totals would mark changes of +1.42% and +15.2%, respectively, from last year.

Any recent changes to analyst estimates for Lithia Motors should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.68% higher within the past month. Lithia Motors is currently a Zacks Rank #3 (Hold).

In terms of valuation, Lithia Motors is currently trading at a Forward P/E ratio of 7.16. This represents a premium compared to its industry's average Forward P/E of 6.24.

We can also see that LAD currently has a PEG ratio of 1.64. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. LAD's industry had an average PEG ratio of 0.41 as of yesterday's close.

The Automotive - Retail and Whole Sales industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 46, which puts it in the top 19% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow LAD in the coming trading sessions, be sure to utilize Zacks.com.

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