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Lithia Motors (LAD) Q3 Earnings Surpass Estimates, Up Y/Y

Lithia Motors LAD reported third-quarter 2020 adjusted earnings of $6.89 per share, which beat the Zacks Consensus Estimate of $6.21. Higher-than-expected revenues across all units led to the outperformance. The bottom line also increased a whopping 103% from the prior-year quarter’s $3.39 per share. In fact, Lithia Motors claims to have reported the highest quarterly income in the company's history. Total revenues rose around 9% year over year to $3,620.2 million. Moreover, the top line surpassed the Zacks Consensus Estimate of $3,567 million.

Lithia Motors, Inc. Price, Consensus and EPS Surprise

Lithia Motors, Inc. Price, Consensus and EPS Surprise

Lithia Motors, Inc. price-consensus-eps-surprise-chart | Lithia Motors, Inc. Quote

Key Takeaways

New vehicle retail revenues increased 3.2% year over year to $1,883.3 million and topped the Zacks Consensus Estimate of $1,874 million. While new vehicle units sold decreased 1.2% from the prior-year quarter to 47,923, the average selling price of new-vehicle retail rose 4.5% to $39,298.

Used-vehicle retail revenues rose 19.3% year over year to $1093.2 million and beat the Zacks Consensus Estimate of $1,060 million. Used-vehicle retail units sold grew 11.8% from the year-ago quarter to 49,363. The average selling price of used-vehicle retail improved 6.7% to $22,145 from the year-ago figure of $20,756. Revenues from used-vehicle wholesale surged 32.8% year over year to $98.8 million and surpassed the consensus mark of $53 million.

Revenues from service, body and parts were up 5.6% from the prior-year period to $360 million, marginally beating the consensus mark of $359 million. The company’s F&I (Finance & Insurance) business recorded 17.8% year-over-year growth in revenues to $160.5 million and topped the consensus estimate of $158 million. Revenues from fleet and others were $24.9 million, down 37.9% year over year.

While same-store new vehicle sales decreased 4.4% year over year, same-store used vehicle retail sales increased 11.2%. While same-store revenues from the F&I business rose 6.6%, the same from the service, body and parts unit dropped 2.9% from the prior-year quarter.

Cost of sales increased 5.2% year over year for third-quarter 2020. SG&A, as a percentage of gross profit, declined from the prior-year level. Pretax and net profit margins improved from the year-ago levels.

Quarterly dividend of 31 cents a share will be payable on Nov 27 to shareholders of record as of Nov 13, 2020.

It had cash and cash equivalents of $57.1 million as of Sep 30, 2020. Long-term debt was $1,799 million, marking an increase from $1,430 million as of Dec 31, 2019.

Zacks Rank & Stocks to Consider

Lithia Motors currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the auto space include Asbury Automotive Group Inc. ABG, Americas CarMart Inc. CRMT and Group 1 Automotive Inc. GPI, each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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