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Lithia Motors Inc Class A LAD

Morningstar Rating
$264.52 −1.91 (0.72%)
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Company Report

We See Lithia as the Most Exciting Growth Story in Our Auto Dealer Coverage

Lithia Motors' business model is strong because it is the only large publicly traded dealer operating in rural markets. These markets are unattractive to larger public dealers, as their management teams have no interest in small cities and they have import and luxury brand mixes more favorable to suburban markets. Nationwide, many Lithia brand stores have no competitors within 100 miles, giving Lithia pricing power.

Price vs Fair Value

LAD is trading at a 47% discount.
Price
$266.43
Fair Value
$469.00
Uncertainty
High
1-Star Price
$178.00
5-Star Price
$156.00
Economic Moat
Vmwdq
Capital Allocation
Kkwldxd

Bulls Say, Bears Say

Bulls

Lithia’s growth runway looks very long to us; acquisitions are opening up new areas of the U.S., and international expansion just started in 2021 by entering Canada and the U.K. in 2023.

Bears

Lithia could need additional capital to fund expansion. In addition, it will face increased competition for acquisitions now that it will operate in large cities and with Berkshire Hathaway seeking auto dealer acquisitions.

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News

Trading Information

Previous Close Price
$266.43
Day Range
$262.16266.67
52-Week Range
$205.97331.96
Bid/Ask
$260.50 / $280.00
Market Cap
$7.28 Bil
Volume/Avg
139,007 / 205,297

Key Statistics

Price/Earnings (Normalized)
7.34
Price/Sales
0.24
Dividend Yield (Trailing)
0.72%
Dividend Yield (Forward)
0.72%
Total Yield
0.97%

Company Profile

Lithia Motors is a retailer of new and used vehicles and related services. The company offers about 50 brands of vehicles at nearly 500 stores globally across the US, Canada, and UK. The company has expanded largely through the acquisition of dealerships in smaller regional markets but now seeks to grow in any part of the US and we expect more deals over time in the US and, at times, abroad. Annual revenue in 2023 was $31 billion and we see over $50 billion possible in a few years. The US was 90% of 2023 revenue and the UK second at 6%, the latter should rise significantly with the early 2024 Pendragon acquisition. In 2023, new-car sales were about 49% of total revenue. Lithia was founded in 1946, went public in 1996, and is the largest US auto dealer. It is based in Medford, Oregon.
Sector
Consumer Cyclical
Industry
Auto & Truck Dealerships
Stock Style Box
Small Value
Total Number of Employees
27,446

Competitors

Valuation

Metric
LAD
KMX
SAH
Price/Earnings (Normalized)
7.3427.637.49
Price/Book Value
1.192.071.94
Price/Sales
0.240.470.13
Price/Cash Flow
5.5610.034.88
Price/Earnings
LAD
KMX
SAH

Financial Strength

Metric
LAD
KMX
SAH
Quick Ratio
0.420.390.24
Current Ratio
1.412.451.10
Interest Coverage
4.87−0.372.39
Quick Ratio
LAD
KMX
SAH

Profitability

Metric
LAD
KMX
SAH
Return on Assets (Normalized)
5.84%2.18%4.76%
Return on Equity (Normalized)
17.76%10.04%27.88%
Return on Invested Capital (Normalized)
8.26%−0.45%8.25%
Return on Assets
LAD
KMX
SAH
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