Q3 Earnings Preview for Lithia Motors (NYSE:LAD)

in EARNINGS/INVESTING IDEAS by

Lithia Motors, Inc. (NYSE:LAD) is scheduled to report Q3 earnings results before markets open for trading on October 21, 2020.

The company is expected to report earnings of $6.23/share on revenue of $3.59 billion. The consensus earnings per share (EPS) of $6.23/share is based on a poll of 7 analysts and represents a growth in eps of 83.9% over the same quarter last year, when the company reported earnings of $3.39/share.

The revenue forecast of $3.59 billion based on a poll of 6 analysts implies a year-over-year (YoY) growth in revenue of 7.7%. Last year the company reported $3.332 billion in revenue for the quarter.

Expected to report EPS growth of 83.9% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $3,590.07 $3,332.40 7.7%
EPS $6.23 $3.39 83.9%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and missed expectations 1 quarters.

What are your expectations from Lithia Motors, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $1.69 $3.72 120.5% Beat
Q1, 2020 $1.96 $2.01 2.7% Beat
Q4, 2019 $2.97 $2.95 −0.5% Missed
Q3, 2019 $3.09 $3.39 9.7% Beat
Q2, 2019 $2.82 $2.95 4.8% Beat
Q1, 2019 $2.17 $2.44 12.3% Beat
Q4, 2018 $2.44 $2.57 5.2% Beat
Q3, 2018 $2.53 $2.83 12.0% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 26.2%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 22, 2020 $174.79 $220.59 26.2% Increase
April 22, 2020 $87.95 $97.67 11.1% Increase
February 12, 2020 $140.11 $130.87 −6.6% Decline
October 23, 2019 $130.32 $154.29 18.4% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.09, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.09 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

Lithia Motors, Inc. is currently trading at $274.72/share, down 0.0% for the day. The company is trading at approximately 98.1% of its 52-week high of $288.56/share. The company’s stock price is up 24.5% since the last earnings report and up 1.6% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 58.73 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:LAD Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 26.50 and a forward P/E multiple of 18.75.

Lithia Motors, Inc.’s current share price also implies a price-to-book (P/B) multiple of 4.79. The following table summarizes some other key fundamental ratios:

Data as of October 19, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $274.72
P/E Ratio 26.5x
P/E Ratio (Fwd) 18.8x
PEG Ratio 8.9
Total Debt / Total Capital 30.0%
Levered Free Cash Flow $899.7 million
EV / EBITDA 17.5x

Finbox

Lithia Motors, Inc. is a mid-cap stock with a market capitalization of $7.282 billion and a total enterprise value of $10.283 billion. The company operates in the Consumer Discretionary sector and the Specialty Retail industry.

Lithia Motors, Inc. operates as an automotive retailer in the United States. The company operates through three segments: Domestic, Import, and Luxury. It offers new and used vehicles; vehicle financing services; warranties, insurance contracts, and vehicle and theft protection services; and automotive repair and maintenance services, as well as sells vehicle body and parts. As of July 29, 2020, the company operated through 190 stores. It also offers its products online through 200 websites. Lithia Motors, Inc. was founded in 1946 and is headquartered in Medford, Oregon.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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