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LKQ Surpasses Earnings Estimates in Q2, Lowers Guidance

Zacks Equity Research

LKQ Corporation’s LKQ second-quarter 2019 adjusted earnings were 65 cents per share, which rose 7% from 61 cents recorded in the prior-year quarter. Further, the figure surpassed the Zacks Consensus Estimate of 64 cents.

Adjusted net income was $204 million, marking 6.3% rise from $192 million recorded in the same period of 2018.

In the second quarter, revenues rose 7% to $3.25 billion from $3.03 billion a year ago. However, the figure missed the Zacks Consensus Estimate of $3.30 billion. The company witnessed 2.1% organic revenue growth in parts and services while revenue growth from acquisitions was 12.6%.

LKQ Corporation Price, Consensus and EPS Surprise

 

LKQ Corporation Price, Consensus and EPS Surprise

LKQ Corporation price-consensus-eps-surprise-chart | LKQ Corporation Quote

Financial Position

LKQ had cash and cash equivalents of $376 million as of Jun 30, 2019, compared with $331.8 million as of Dec 31, 2018.

At the end of second-quarter 2019, the company had net cash provided by operating activities of $461.2 million compared with $183.5 million as of Jun 30, 2018. Free cash flow improved significantly year over year to $537 million.

Share Buyback

During the quarter under review, LKQ repurchased roughly 4.4 million shares for $120 million. Since the initiation of share repurchase in October 2018, the company has bought back 9.3 million shares for $251 million.

2019 Outlook

For 2019, LKQ lowered the earnings per share projection to $1.73-$1.81 from the previously mentioned $1.87-$2.00. Organic revenue growth for parts & services is projected to be 0.5-2%, down from 2-4% stated earlier. Further, adjusted net income is projected to be around $718-$743 million, down from $732-$771 million mentioned previously.

Zacks Rank & Stocks to Consider

LKQ currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the auto space are Copart, Inc CPRT, CarMax, Inc KMX and Advance Auto Parts, Inc. AAP. While Copart sports a Zacks Rank #1 (Strong Buy), CarMax and Advance Auto Parts has a Zacks Rank #2 (Buy) 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%. In the past six months, shares of the company have shot up 59.3%.

CarMax has an expected long-term growth rate of 12.6%. In the past six months, shares of the company have rallied 47.9%.

Advance Auto Parts has an expected long-term growth rate of 11.6%. In the past six months, shares of the company have improved 2.3%.

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