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Why Is Lithia Motors (LAD) Down 1.4% Since Last Earnings Report?
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It has been about a month since the last earnings report for Lithia Motors (LAD - Free Report) . Shares have lost about 1.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Lithia Motors due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Lithia Q1 Earnings Miss Expectations, Dividend Hiked
Lithia reported first-quarter 2024 adjusted earnings per share (EPS) of $6.11, which declined from the prior-year quarter’s $8.44 and missed the Zacks Consensus Estimate of $7.85.
Total revenues jumped 23% year over year to $8.56 billion. The top line outpaced the Zacks Consensus Estimate of $8.5 billion.
Segmental Performance
New vehicle retail revenues increased 22.4% year over year to $4 billion, missing our estimate of $4.3 billion due to a lower-than-expected number of units sold and average selling price (ASP).
New vehicle units sold rose 26.4% from the prior-year quarter’s levels to 85,683 units, missing our estimate of 86,301 units.
The ASP of new-vehicle retail decreased to $46,848 from $48,364 reported in the prior-year quarter, lagging our estimate of $49,935. The gross margin in this segment contracted 280 basis points (bps) to 7.4% amid the high cost of sales, which flared up 26.3% year over year to $3.72 billion.
Used-vehicle retail revenues rose 25.7% year over year to $2.8 billion and beat our estimate of $2.62 billion. Higher-than-anticipated number of units sold resulted in the outperformance.
The used-vehicle retail units sold rose 31.1% from the year-ago quarter to 102,436 units, outpacing our expectation of 89,091 units. The ASP of used-vehicle retail was $27,342, dropping 4.1% year over year and missing our estimate of $29,420. The gross margin in the segment declined 20 bps to 7.2%.
Revenues from used-vehicle wholesale fell 6.9% to $332.2 million and missed our estimate of $396.5 million.
Revenues from service, body and parts were up 24% from the prior-year period’s levels to $912.8 million, outpacing our estimate of $748.9 million. The gross margin in the segment increased 140 bps to 55%.
The company’s finance and insurance revenues rose 7% to $340.6 million and exceeded our estimate of $321.3 million.
Revenues from fleet and others were $155.9 million, which increased 177.9% year over year and topped our expectation of $68.4 million.
Same-store new-vehicle revenues increased 2.3% year over year and same-store used-vehicle retail sales declined 5%.
Same-store revenues from finance and insurance fell 4.8%, while that of the service, body and parts unit grew 3.2%.
Financial Tidbits
Cost of sales jumped 25.3% year over year in first-quarter 2024. SG&A expenses were $934.3 million, up 22.2% from $764.4 million reported in the year-ago quarter. Adjusted SG&A as a percentage of gross profit was 69.4%. Pretax and net profit margins declined from the year-ago levels.
The company hiked its quarterly dividend to 53 cents per share from 50 cents. The dividend is to be paid on May 24, 2024, to shareholders of record as of May 10, 2024. The company repurchased nearly 58,000 shares at an average price of $264.42. As of Mar 31, 2024, Lithia had approximately $451.7 million shares remaining under its buyback authorization.
Lithia had cash/cash equivalents/restricted cash of $404.6 million as of Mar 31, 2024, down from $941.1 million as of Dec 31, 2023. Long-term debt was $5.7 billion as of Mar 31, 2024, up from $5.5 billion as of Dec 31, 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -13.97% due to these changes.
VGM Scores
At this time, Lithia Motors has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Lithia Motors has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Why Is Lithia Motors (LAD) Down 1.4% Since Last Earnings Report?
It has been about a month since the last earnings report for Lithia Motors (LAD - Free Report) . Shares have lost about 1.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Lithia Motors due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Lithia Q1 Earnings Miss Expectations, Dividend Hiked
Lithia reported first-quarter 2024 adjusted earnings per share (EPS) of $6.11, which declined from the prior-year quarter’s $8.44 and missed the Zacks Consensus Estimate of $7.85.
Total revenues jumped 23% year over year to $8.56 billion. The top line outpaced the Zacks Consensus Estimate of $8.5 billion.
Segmental Performance
New vehicle retail revenues increased 22.4% year over year to $4 billion, missing our estimate of $4.3 billion due to a lower-than-expected number of units sold and average selling price (ASP).
New vehicle units sold rose 26.4% from the prior-year quarter’s levels to 85,683 units, missing our estimate of 86,301 units.
The ASP of new-vehicle retail decreased to $46,848 from $48,364 reported in the prior-year quarter, lagging our estimate of $49,935. The gross margin in this segment contracted 280 basis points (bps) to 7.4% amid the high cost of sales, which flared up 26.3% year over year to $3.72 billion.
Used-vehicle retail revenues rose 25.7% year over year to $2.8 billion and beat our estimate of $2.62 billion. Higher-than-anticipated number of units sold resulted in the outperformance.
The used-vehicle retail units sold rose 31.1% from the year-ago quarter to 102,436 units, outpacing our expectation of 89,091 units. The ASP of used-vehicle retail was $27,342, dropping 4.1% year over year and missing our estimate of $29,420. The gross margin in the segment declined 20 bps to 7.2%.
Revenues from used-vehicle wholesale fell 6.9% to $332.2 million and missed our estimate of $396.5 million.
Revenues from service, body and parts were up 24% from the prior-year period’s levels to $912.8 million, outpacing our estimate of $748.9 million. The gross margin in the segment increased 140 bps to 55%.
The company’s finance and insurance revenues rose 7% to $340.6 million and exceeded our estimate of $321.3 million.
Revenues from fleet and others were $155.9 million, which increased 177.9% year over year and topped our expectation of $68.4 million.
Same-store new-vehicle revenues increased 2.3% year over year and same-store used-vehicle retail sales declined 5%.
Same-store revenues from finance and insurance fell 4.8%, while that of the service, body and parts unit grew 3.2%.
Financial Tidbits
Cost of sales jumped 25.3% year over year in first-quarter 2024. SG&A expenses were $934.3 million, up 22.2% from $764.4 million reported in the year-ago quarter. Adjusted SG&A as a percentage of gross profit was 69.4%. Pretax and net profit margins declined from the year-ago levels.
The company hiked its quarterly dividend to 53 cents per share from 50 cents. The dividend is to be paid on May 24, 2024, to shareholders of record as of May 10, 2024. The company repurchased nearly 58,000 shares at an average price of $264.42. As of Mar 31, 2024, Lithia had approximately $451.7 million shares remaining under its buyback authorization.
Lithia had cash/cash equivalents/restricted cash of $404.6 million as of Mar 31, 2024, down from $941.1 million as of Dec 31, 2023. Long-term debt was $5.7 billion as of Mar 31, 2024, up from $5.5 billion as of Dec 31, 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -13.97% due to these changes.
VGM Scores
At this time, Lithia Motors has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Lithia Motors has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.