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Lithia Motors (LAD) Q3 Earnings & Revenues Beat Estimates

Zacks Equity Research

Lithia Motors, Inc. LAD reported adjusted earnings per share of $3.39 in third-quarter 2019, marking a 20% increase from the prior-year quarter’s $2.83. Further, the bottom line beat the Zacks Consensus Estimate of $3.14. The upside in earnings stemmed from strong gains across all business lines.

In the reported quarter, adjusted net income rose 16% year over year to $79 million.

Total revenues grew 8% year over year to $3.3 billion. The figure also outpaced the Zacks Consensus Estimate of $3.24 billion. Total same-store sales grew 7.6% year over year to $3,249.7 million.

Gross profit rose 9.6% to $510.9 million in the reported quarter from $466.2 million 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

Q3 Highlights

Revenues from new-vehicle retail grew 5.3% year over year to $1.82 billion. New-vehicle retail units sold declined 0.6% to 48,508. The average selling price of new-vehicle retail rose 5.9% year over to year to $37,618.

Used-vehicle retail revenues rose 13.7% year over year to $916.3 million. Revenues from used-vehicle wholesale declined 19.1% year over year to $74.4 million. Used-vehicle retail units sold grew 11% to 44,143. The average selling price of used-vehicle retail improved 2.4% to $20,756 from the year-ago figure of $20,274.

Revenues from service, body and parts went up 9.4% to $340.5 million. The company’s F&I business recorded 12.6% growth in revenues to $136.3 million. Revenues from fleet and others were $40.1 million, up 39.7% year over year.

Financial Position

Lithia Motors had cash and cash equivalents of $27.1 million as of Sep 30, 2019, down from $31.6 million as of Dec 31, 2018. Long-term debt was $1.29 billion as of Sep 30, 2019, marking a decline from $1.36 billion recorded as of Dec 31, 2018.

Dividend Payment

Lithia Motors’ board approved a dividend of 30 cents per share for third-quarter 2019. The amount will be payable Nov 22 to shareholders of record as of Nov 8, 2019.

Outlook

Earlier this month, the company acquired John Howard Subaru, Waterfront Jeep and Urse Chrysler Dodge Ram Fiat in Morgantown, WV. So far this year, Lithia Motors has acquired seven stores. These are expected to generate revenues of more than $475 million. Recently, the company activated proprietary technology in the Pittsburgh market. These scalable, digital solutions are expected to drive improvements and efficiencies across Lithia Motors’ network.

Other Key Picks

Lithia Motors currently sports a Zacks Rank #1 (Strong Buy).

A few other top-ranked stocks in the Auto-Tires-Trucks sector are BRP Inc DOOO and Sonic Automotive, Inc SAH, currently sporting a Zacks Rank #1, and Asbury Automotive, Inc. ABG, carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

BRP has an expected earnings growth rate of 18.4% for 2019. The company’s shares have gained 68.5% year to date.

Sonic Automotive has an estimated earnings growth rate of 32.7% for 2019. Its shares have gained 114.5% year to date.

Asbury Automotive has an estimated earnings growth rate of 10.3% for 2019. Its shares have gained 45% year to date.

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