Guggenheim has updated its price target for Lithia & Driveway (LAD, Financial), increasing it from $356 to $375 while maintaining a Buy rating. Although franchise auto dealers delivered first-quarter results that generally surpassed expectations, market reactions were mixed. Investors showed hesitance despite these robust outcomes, due in part to higher selling, general, and administrative (SG&A) expenses and other unique factors. The firm anticipates improved SG&A performance in the second quarter, driven by favorable market conditions and a sharper operational focus.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 14 analysts, the average target price for Lithia Motors Inc (LAD, Financial) is $387.65 with a high estimate of $465.00 and a low estimate of $305.00. The average target implies an upside of 19.07% from the current price of $325.57. More detailed estimate data can be found on the Lithia Motors Inc (LAD) Forecast page.
Based on the consensus recommendation from 16 brokerage firms, Lithia Motors Inc's (LAD, Financial) average brokerage recommendation is currently 1.8, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Lithia Motors Inc (LAD, Financial) in one year is $373.81, suggesting a upside of 14.82% from the current price of $325.57. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Lithia Motors Inc (LAD) Summary page.
LAD Key Business Developments
Release Date: April 23, 2025
- Diluted Earnings Per Share (EPS): $7.94, a 34.8% year-over-year increase.
- Adjusted Diluted EPS: $7.66, a 25.4% increase year-over-year.
- Revenue: $9.2 billion, a 7% increase from Q1 of last year.
- Same-Store Sales Revenue Increase: 2.5% year-over-year.
- Same-Store Gross Profit Increase: 1.8% year-over-year.
- Total Unit Sales Increase: 1.5% year-over-year.
- New Vehicle Units Increase: 3.6% year-over-year.
- Value Auto Sales Increase: 38.8% year-over-year.
- Adjusted SG&A as a Percentage of Gross Profit: 68.2%, a 120 basis point decline from the prior year.
- Free Cash Flow: $276 million generated in the first quarter.
- Share Repurchases: $146 million, nearly 2% of outstanding shares repurchased.
- Adjusted EBITDA: $402.1 million, a 17.1% increase year-over-year.
- Net Leverage: 2.5 times, in line with long-term target.
- DFC Loan Originations: $623 million during the quarter, a 24% sequential increase.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Lithia Motors Inc (LAD, Financial) reported a 34.8% year-over-year increase in diluted earnings per share, reaching $7.94.
- The company achieved record revenues of $9.2 billion in the first quarter, marking a 7% increase from the previous year.
- Lithia Motors Inc (LAD) experienced significant growth in its value auto sales, with a 38.8% improvement year-over-year.
- The company's financing operations, led by Driveway Finance Corporation (DFC), delivered strong profitability with a net interest margin expansion of 117 basis points year-over-year.
- Lithia Motors Inc (LAD) repurchased nearly 2% of its outstanding shares in the first quarter, reflecting a balanced capital allocation strategy.
Negative Points
- The company faced challenges with tariffs, although it managed to mitigate some impacts due to its diversified inventory.
- Same-store gross profit per unit decreased by $144 compared to the same period last year.
- Used vehicle sales were down slightly by 0.4% year-over-year, indicating some challenges in this segment.
- The company anticipates potential lumpiness in sales due to tariff impacts, particularly in the fall.
- Lithia Motors Inc (LAD) noted that the ABS term market is currently frothy and choppy, which could impact future financing operations.
