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Lithia Motors Inc Class A - Stock Quote LAD

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Morningstar's Lithia Motors Inc Class A Stock Analysis

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Lithia's First Quarter Is Another Excellent One in Our Opinion

Analyst Note

| David Whiston, CFA, CPA, CFE |

Lithia Motors started 2022 with what we see as excellent first-quarter results, and we are not changing our fair value estimate. The trends of massive year-over-year growth from acquisitions as well as strong same-store revenue growth of 11.7% and excellent new and used vehicle pricing due to strong demand and low new vehicle inventory continued. We expect these trends will continue for the rest of the year as we expect the chip shortage recovery will take a long time. Gross profit per new vehicle unit more than doubling to $6,179 on a 20.6% rise in new vehicle units sold and used vehicle GPU up 32% to $3,037 on a 24.8% unit sales rise helped drive total gross profit dollars up 79%, which in turn leveraged overhead costs to an outstanding low level of gross profit of 57.1%—a 550-basis-point improvement versus the prior-year quarter. This improvement drove a 200-basis-point increase in adjusted operating margin to 7.6%, and adjusted diluted EPS of $11.96 more than doubled and beat the Refinitiv consensus of $10.09.

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Lithia Motors Inc Class A's Company Profile

Business Description

Lithia Motors is a retailer of new and used vehicles and related services. The company offers 40 brands of vehicles at 278 stores in 25 states at year-end 2021 and entered Canada in mid-2021 with the purchase of Pfaff Automotive. The company has expanded largely through the acquisition of dealerships in smaller regional markets but now seeks to grow in any part of the U.S. and we expect more deals over time in Canada or perhaps Europe. Annual revenue in 2021 was $22.8 billion and we see over $50 billion possible in 2025. In 2021, new-car sales were about 49% 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.

150 N. Bartlett Street
Medford, OR, 97501
T +1 541 776-6401
Sector Consumer Cyclical
Industry Auto & Truck Dealerships
Most Recent Earnings Mar 31, 2022
Fiscal Year End Dec 31, 2022
Stock Type Cyclical
Employees 21,150

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