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Lithia Motors' (LAD) Q2 Earnings & Revenues Beat Estimates

Lithia Motors Inc. LAD reported adjusted earnings per share of $2.28 in the second quarter of 2017, increasing from $1.96 in the prior-year quarter. The earnings also beat the Zacks Consensus Estimate of $2.23. Adjusted net income rallied almost 11.5% to $45 million from $40.4 million in the year-ago quarter.

Reportedly, the net income was $53.2 million compared with $50.2 million in the second quarter of 2016.

Revenues for the reported quarter were $2.47 billion, up from $2.13 billion in the year-ago quarter. Also, this figure surpassed the Zacks Consensus Estimate of $2.46 billion.
 
Revenues from new vehicle retail sales increased 14.5% to $1.38 billion in the quarter. New vehicle retail sales volume improved 13.4% to 40,876 units. Revenues per vehicle rose 1% to $33,860.

Used vehicle retail revenues increased 4.1% to $575.4 million in the quarter, whereas revenues from used vehicle wholesale declined 13.2% to $57.5 million. Used vehicle retail sales volume improved 16.1% to 10,906 units, with revenues per vehicle declining 1.4% to $19,696.

Revenues from service body and parts went up 7.1% to $71.5 million. The company’s finance and insurance business recorded an 8.2% rise in revenues to $87.7 million. Revenues from fleet and other surged 59.1% to $32.8 million.

Gross profit increased 5.2% to $338.4 million in the reported quarter from $321.7 million in the year-ago quarter.

Lithia Motors, Inc. Price, Consensus and EPS Surprise

Segment Details

Domestic segment revenues increased 15% to $955 million on a 13.2% rise in retail new vehicle unit sales to 13,256 automobiles. However, the segment’s income declined 3.9% to $27.9 million in the quarter under review.

Import segment revenues went up 18.4% to $1.1 billion on a 16% rise in retail new vehicle unit sales to 23,287 automobiles. Segment income increased 9.4% to $32.5 million in the reported quarter.

Revenues at the Luxury segment rose 11.1% to $413.1 million. Retail new vehicle sales increased 2.5% to 4,423 luxury vehicles. The segment’s income rose 3.7% to $10.1 million in the quarter.

Acquisition

In May 2017, the company completed the acquisition of Baierl Auto Group in Pittsburgh, PA. The acquired dealership sells Acura, Cadillac, Chevrolet, Ford, Honda, Kia, Subaru and Toyota vehicles, which helped Lithia Motors sto start its dealership services in the state. On a yearly-basis, the acquired company is expected to generate $500 million in sales.

Financial Details

Lithia Motors had cash and cash equivalents of $31.2 million as of Jun 30, 2017, down from $50.3 million as of Dec 31, 2016. Long-term debt was $777.8 million as of Jun 30, 2017, compared with $769.9 million as of Dec 31, 2016.

Dividend

Lithia Motors announced a quarterly dividend of 27 cents per share, which will be paid on Aug 25 to shareholders of record as of Aug 11, 2017.
Outlook

Lithia Motors increased the anticipated earnings range to $8.05–$8.35 per share, up from $8–$8.30 per share for full-year 2017. The company continues to expect revenues between $9.2 billion and $9.4 billion for 2017.

Price Performance

Lithia Motors shares have gained 12.3% in the last three months, thus substantially outperforming the 1.7% increase of the industry it belongs to.



Zacks Rank & Key Picks

Lithia Motors currently carries a Zacks Rank #3 (Hold).

Some better-ranked companies in the auto space are Allison Transmission Holdings ALSN, Volkswagen AG VLKAY and Daimler AG DDAIF, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Allison Transmission has expected long-term growth rate of 11%.

Volkswagen has expected growth rate of around 17.3% in the long run.

Daimler has expected long-term growth rate of 2.8%.

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Lithia Motors, Inc. (LAD): Free Stock Analysis Report
 
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