Lithia (LAD) To Grow From Store Openings & Acquisitions

On Feb 23, we issued an updated research report on Lithia Motors, Inc. (NYSE:LAD) .

On Feb 14, the company announced fourth-quarter and full-year 2017 results. It reported adjusted earnings per share of $2.15 in fourth-quarter 2017, beating the Zacks Consensus Estimate of $2.10. Quarterly revenues rose 18% to $2.7 billion. The top line also surpassed the Zacks Consensus Estimate of $2.68 billion. Further, the company anticipates a positive outlook for 2018.

For 2018, Lithia Motors projects revenues to be in the range of $11-$11.5 billion, a rise from $10.1 billion generated in 2017. Also, adjusted earnings per share are expected to be $10.5, as against $8.39 in 2017. These positive expectations are on the back of lower tax rates and improved operations during the year.

Lithia Motors, Inc. Price and Consensus

Earnings estimates for Lithia Motors have been going up lately. The Zacks Consensus Estimate for annual earnings for the stock has been revised 4.3% upward, in the last seven days.

The company is poised to benefit from its business expansion through acquisitions and store openings. In 2017, Lithia Motors acquired a total of 18 stores and opened one, which is expected to generate annualized revenue of over $1.7 billion.

Also, in order to boost shareholders confidence in the company, its management pursues regular quarterly cash dividend payment. For fourth-quarter 2017, the company will pay a dividend of 27 cents on Mar 23, to shareholders of record on Mar 9, 2018.

Price Performance

Over a year, shares of Lithia Motors’ have outperformed the industry it belongs to. During the time period, the company’s stock gained 12.3% in comparison with the industry’s rally of 5%.

Zacks Rank & Other Key Picks

Lithia Motors has a Zacks Rank #2 (Buy).

A few other top-ranked stocks in the auto space are General Motors Company (NYSE:GM) , PACCAR, Inc. (NASDAQ:PCAR) and Penske Automotive Group, Inc. (NYSE:PAG) each carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

General Motors has an expected long-term growth rate of 8.4%. In the last six months, shares of the company have gained 15.2%.

PACCAR has an expected long-term growth rate of 10%. In the last six months, shares of the company have gained 10.7%.

Penske Automotive has an expected long-term growth rate of 10%. In the last three months, shares of the company have gained 3.4%.

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