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Lithia Motors (LAD) Q2 Earnings & Sales Top Estimates, Up Y/Y

Zacks Equity Research

Lithia Motors, Inc. LAD reported adjusted earnings per share of $2.95 in second-quarter 2019, marking a 17% increase from the prior-year quarter’s $2.52. Further, the bottom-line figure beat the Zacks Consensus Estimate of $2.87. This upside stemmed from increasing same-store sales across all business lines.

Reportedly, in the second quarter, adjusted net income went up 11% year over year to $69 million. Total revenues in the quarter increased 4% year over year to $3.22 billion. The reported figure also outpaced the Zacks Consensus Estimate of $3.21 billion. Total same-store sales increased 5.8% year over year to $3,173.3 million.

Gross profit rose 7.1% to $493.6 million in the reported quarter from $460.7 million witnessed in the year-ago quarter.

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

Quarter in Detail

Revenues from new-vehicle retail edged down 1.1% year over year to $1.71 billion in the reported quarter. New-vehicle retail sales declined 6.4% to 45,887 units. The average selling price of new-vehicle retail rose 5.6% year over to year to $37,208 million.

Used-vehicle retail revenues climbed 10.5% year over year to $888 million during the April-June quarter. Revenues from used-vehicle wholesale declined 4.2% year over year to $81.7 million. Used-vehicle retail unit sales volume expanded 9.6% to 42,865 units. The average selling price of used-vehicle retail inched up 0.8% to $20,724 million from the year-ago figure of $20,567 million.

Revenues from service body and parts went up 7.7% to $335.5 million. The company’s F&I business recorded 12.7% growth in revenues to $129 million. Revenues from fleet and others came in at $79.8 million compared with the year-ago figure of $54.4 million.

Financial Details

Lithia Motors had cash and cash equivalents of $44.7 million as of Jun 30, 2019, up from the $31.6 million as of Dec 31, 2018. Long-term debt was $1.32 billion as of Jun 30, 2019, marking a decrease from $1.36 billion recorded on Dec 31, 2018.

Dividend Payment

Lithia Motors’ board approved a quarterly dividend of 30 cents per share for second-quarter 2019. The amount will be payable on Aug 23, to shareholders of record as of Aug 9, 2019.

Corporate Development

In the June-end quarter, the company added Hamilton Honda in Hamilton Township, NJ, and Ford Lincoln of Morgantown in Morgantown, WV. Recently, Lithia Motors added first Jaguar Land Rover franchise in Mission Viejo, CA. These are expected to add over $320 million annualized revenues.

Zacks Rank & Other Stocks to Consider

Lithia Motors currently carries a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the auto space are Copart, Inc CPRT, CarMax, Inc KMX and Advance Auto Parts, Inc AAP. While Copart currently sports a Zacks Rank #1 (Strong Buy), CarMax and Advance Auto Parts carry a Zacks Rank of 2, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Copart has an expected long-term growth rate of 20%. Over the past six months, shares of the company have surged 58.2%.

CarMax has an estimated long-term growth rate of 12.6%. In the past six months, the stock has appreciated 43%.

Advance Auto Parts has a projected long-term growth rate of 11.56%. The company’s shares have rallied 2.9% in six months’ time.

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