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Lithia Motors (LAD) Tops Q3 Earnings & Revenues; Stock Up

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Lithia Motors Inc. 's LAD shares gained 3.7% to close at $110.46 on Oct 21, after the company reported a 54% rise in adjusted earnings per share to $2.03 in the third quarter of 2015 from $1.32 in the corresponding quarter last year. Earnings also surpassed the Zacks Consensus Estimate of $1.81 by a wide margin. Adjusted net income surged 54% to $53.6 million from $34.9 million in the year-ago quarter. This is an all-time record high net income for the company.

Lithia Motors Inc. - Earnings Surprise | FindTheBest

Including one-time items, net income increased to $43.4 million or $1.64 per share from $34.5 million or $1.31 per share in the third quarter of 2014.

Revenues for the reported quarter surged 61% to $2.1 billion from $1.3 billion in the year-ago quarter. The upside was driven by improved performance across all the segments. Revenues also outpaced the Zacks Consensus Estimate of $2.03 billion.

Revenues from new vehicle retail sales improved 67.6% to $1.23 billion in the quarter. New vehicle retail sales volume increased 75.4% to 37,401 units. However, revenues per vehicle fell 4.5% to $32,809. On a same-store basis, revenues from new vehicle sales went up 11.4% to $810.7 million.

Revenues from used vehicle retail rose 48.6% to $505.9 million in the quarter. Revenues from used vehicle wholesale went up 42.2% to $69.5 million. Used vehicle retail sales volume improved 48% to 26,206 units, with revenues per vehicle rising 0.4% to $19,304. Same-store revenues from used vehicle retail sales increased 12.8% to $381.8 million, while that from used vehicle wholesale grew 11.3% to $54.1 million.

Revenues from service body and parts went up 57.2% to $189.8 million. Meanwhile, the company's finance and insurance business recorded a 63.6% rise in revenues to $76.6 million. Revenues from Fleet and Other surged 100% to $16 million.

Gross profit increased 57.3% to $311.2 million in the reported quarter from $197.8 million in the year-ago quarter. Operating income improved 21% to $72.8 million from $60.1 million in the third quarter of 2014.

Financial Details

Lithia Motors had cash and cash equivalents of $32.7 million as of Sep 30, 2015, up from $29.9 million as of Dec 31, 2014. Total debt was $630 million as of Sep 30, 2015, compared with $641 million as of Dec 31, 2014.

Dividend

Lithia Motors announced a quarterly dividend of 20 cents per share for the third quarter of 2015. The dividend will be paid on Nov 20, to shareholders on record as of Nov 6, 2015.

Outlook

Lithia Motors expects earnings in the range of $1.61-$1.65 per share for the fourth quarter of 2015. Also, the company anticipates earnings in the band of $6.89-$6.93 per share for full-year 2015, higher than the previous projection of $6.63-$6.72.

Lithia Motors expects revenues between $7.8 billion and $7.9 billion for 2015, with a 48% increase in new vehicle sales and a 41% rise in used vehicle sales. Sales from service body and parts will likely increase 44%.

In 2016, Lithia Motors expects earnings in the range of $1.46-$1.50 per share for the first quarter. Also, the company envisions earnings in the band of $7.15-$7.35 per share for full-year 2016.

Lithia Motors expects revenues between $8.3 billion and $8.4 billion for 2016, with a 5.5% increase in new vehicle sales and a 6% rise in used vehicle sales. Sales from service body and parts will likely increase 5%.

Zacks Rank

Lithia Motors currently carries a Zacks Rank #2 (Buy). Other well-ranked automobile stocks include AutoNation, Inc. AN , The Goodyear Tire & Rubber Company GT and Penske Automotive Group, Inc. PAG , all carrying a Zacks Rank #2.

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PENSKE AUTO GRP (PAG): Free Stock Analysis Report

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AUTONATION INC (AN): Free Stock Analysis Report

LITHIA MOTORS (LAD): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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