Stock Strategist

LKQ's Shares Remain Attractive

Scott Pope, CFA

 LKQ (LKQ) is a leading alternative auto-parts distributor with operations in North America and Europe. It distributes includes new aftermarket parts and remanufactured and recycled parts, typically at a discount of up to 50% over original-equipment manufacturer parts. Its ability to source new products from low-cost overseas manufacturers and to obtain parts through salvaging more than 300,000 automobiles annually gives LKQ unparalleled scale of operations. In addition, it has combined extensive distribution networks in North America and Europe with local delivery and strong customer relationships. These elements allow LKQ to offer its repair shop customers significantly higher fulfillment rates than its competitors.

The company reported first-quarter adjusted earnings per share of $0.56, in line with consensus. Revenue of $3.10 billion missed Wall Street estimates by 1%. The performance was solid given numerous headwinds, including weak macroeconomic factors in Europe and unusually low collision activity in North America, which CCC Information Services indicated was down 2.6% year over year.

Scott Pope, CFA does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.