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Lithia Motors Inc Class A LAD

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Morningstar’s Analysis

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Lithia's Second Quarter Is a Record With Incredible EPS; International Expansion May Be Near

Analyst Note

| David Whiston, CFA, CPA, CFE |

Lithia Motors reported record second-quarter results on July 21 with adjusted diluted EPS from continuing operations of $11.12 well above the Refinitiv consensus of $6.17 and nearly quadruple second-quarter 2019’s adjusted EPS of $2.95. Same-store revenue increased by 52.9% versus second-quarter 2020 and relative to second-quarter 2019, same-store revenue grew by 20% for new vehicles and 49% for used vehicles. We are raising our fair value estimate to $421 from $362 on the time value of money, a lower share count, about 11% more revenue over our five-year forecast period than previously modeled due to how 2021 is tracking and less overhead costs as a percent of revenue to give Lithia more credit for its ability to scale over time.

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Company Profile

Business Description

Lithia Motors is a retailer of new and used vehicles and related services. The company offers 33 brands of vehicles at over 200 stores in 22 states. The company has expanded largely through the acquisition of dealerships in smaller regional markets and via deals in New York and Southern California. Annual revenue in 2020 was $13.1 billion and we see over $21 billion possible in 2021. In 2020, new-car sales were about 52% of total revenue. Lithia was founded in 1946, went public in 1996, and is now one of the largest U.S. auto dealerships. It is based in Medford, Oregon.

Contact
150 N. Bartlett Street
Medford, OR, 97501
T +1 541 776-6401
Sector Consumer Cyclical
Industry Auto & Truck Dealerships
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 14,538

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