Lithia Motors (NYSE:LAD) Shares Up 5.2% on Better-Than-Expected Earnings

Lithia Motors, Inc. (NYSE:LAD)’s share price shot up 5.2% during mid-day trading on Thursday after the company announced better than expected quarterly earnings. The company traded as high as $287.20 and last traded at $283.1740. 55,409 shares traded hands during mid-day trading, a decline of 82% from the average daily volume of 313,209 shares. The stock had previously closed at $269.13.

The company reported $10.34 EPS for the quarter, topping the consensus estimate of $9.70 by $0.64. Lithia Motors had a net margin of 1.88% and a return on equity of 12.16%. The business had revenue of $9.95 billion during the quarter, compared to analyst estimates of $9.75 billion. During the same quarter in the prior year, the firm earned $9.50 earnings per share. The company’s quarterly revenue was up 2.8% on a year-over-year basis.

Lithia Motors Increases Dividend

The company also recently announced a quarterly dividend, which will be paid on Friday, November 20th. Shareholders of record on Friday, November 6th will be given a $0.75 dividend. This is a positive change from Lithia Motors’s previous quarterly dividend of $0.70. The ex-dividend date is Friday, November 6th. This represents a $3.00 annualized dividend and a yield of 1.1%. Lithia Motors’s payout ratio is currently 9.29%.

More Lithia Motors News

Here are the key news stories impacting Lithia Motors this week:

• Positive Sentiment: Q3 earnings and revenue exceeded expectations. Adjusted earnings were $10.34 per share versus the $9.70 consensus estimate, while revenue reached approximately $9.95 billion compared with expectations of $9.75 billion. Revenue increased 2.8% year over year, and adjusted EPS rose 9%. Lithia Motors Tops Q3 Earnings and Revenue Estimates
• Positive Sentiment: Core operating metrics improved. Used retail gross profit per unit increased 11% year over year, aftersales gross margin rose to 59.5% on a same-store basis, and Driveway Finance income jumped 69% to $32.3 million. Record finance originations of $937 million also indicate solid demand for the company’s financing operations. Lithia Three Key Takeaways
• Positive Sentiment: Capital returns increased. Lithia repurchased $85 million of stock during the quarter and announced a 7.1% dividend increase, raising the quarterly payout to $0.75 per share, or $3.00 annualized. Lithia Third Quarter Results
• Neutral Sentiment: Management’s earnings call provides additional detail on sales trends, financing, margins, and the company’s outlook for investors. Lithia Motors Q3 Earnings Call Transcript
• Negative Sentiment: Technical and balance-sheet concerns remain. LAD trades below its 50-day and 200-day moving averages, while its debt-to-equity ratio is 1.46 and quick ratio is 0.21. These factors may limit the market’s reaction to the earnings beat despite the improved results.

Wall Street Analysts Forecast Growth

Several equities research analysts have commented on LAD shares. UBS Group dropped their price target on shares of Lithia Motors from $440.00 to $335.00 and set a “neutral” rating on the stock in a research note on Wednesday, October 7th. Citigroup reduced their price objective on Lithia Motors from $455.00 to $409.00 and set a “buy” rating for the company in a research report on Tuesday, September 22nd. Barclays decreased their price objective on Lithia Motors from $415.00 to $375.00 and set an “overweight” rating for the company in a report on Tuesday, October 6th. Wells Fargo & Company raised their target price on Lithia Motors from $306.00 to $395.00 and gave the company an “equal weight” rating in a research report on Thursday, July 30th. Finally, Morgan Stanley cut their target price on Lithia Motors from $358.00 to $310.00 and set an “equal weight” rating on the stock in a research note on Monday, October 5th. Six research analysts have rated the stock with a Buy rating and six have given a Hold rating to the company. According to MarketBeat.com, the stock currently has a consensus rating of “Moderate Buy” and an average price target of $402.60.

Insider Buying and Selling

In other Lithia Motors news, Director Stacy Congdon sold 75 shares of the business’s stock in a transaction dated Friday, September 11th. The shares were sold at an average price of $370.73, for a total transaction of $27,804.75. Following the sale, the director directly owned 2,300 shares in the company, valued at approximately $852,679. The trade was a 3.16% decrease in their position. The transaction was disclosed in a filing with the Securities & Exchange Commission, which can be accessed through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Insiders own 1.08% of the company’s stock.

Institutional Trading of Lithia Motors

A number of institutional investors have recently made changes to their positions in LAD. BlackRock Inc. bought a new position in shares of Lithia Motors in the second quarter valued at approximately $696,482,000. Dimensional Fund Advisors LP raised its holdings in Lithia Motors by 3.2% during the first quarter. Dimensional Fund Advisors LP now owns 1,389,870 shares of the company’s stock worth $347,074,000 after purchasing an additional 43,087 shares in the last quarter. Madison Asset Management LLC bought a new stake in Lithia Motors during the second quarter worth approximately $66,988,000. Bank of New York Mellon Corp acquired a new stake in Lithia Motors in the second quarter worth approximately $63,015,000. Finally, The Manufacturers Life Insurance Company acquired a new stake in Lithia Motors in the second quarter worth approximately $42,718,000.

Lithia Motors Price Performance

The business has a 50-day simple moving average of $333.62 and a two-hundred day simple moving average of $315.12. The company has a quick ratio of 0.21, a current ratio of 1.00 and a debt-to-equity ratio of 1.46. The stock has a market capitalization of $6.26 billion, a price-to-earnings ratio of 9.44, a P/E/G ratio of 0.69 and a beta of 1.27.

About Lithia Motors

Lithia Motors, Inc is an automotive retailer headquartered in Medford, Oregon. Operating under the Lithia & Driveway name, the company sells new and used vehicles through a network of franchised dealerships and digital retail channels. Its dealerships represent a broad range of domestic, Asian and European automotive brands.

In addition to vehicle sales, Lithia provides related services including vehicle financing and insurance products, parts and maintenance, collision repair, and other after-sales support.