LKQ Corp???s (LKQ) Earnings Lag, Revenues Top Estimates In Q4

LKQ Corporation’s (NASDAQ:LKQ) fourth-quarter 2017 adjusted earnings from continuing operations came in at 41 cents per share, missing the Zacks Consensus Estimate of 42 cents. However, the bottom line improved from the prior-year quarter figure of 35 cents.

Adjusted net income from continuing operations was $126 million in comparison to $108 million in the prior-year quarter.

In the fourth quarter, total revenue rose 14.9% to $2.42 billion from $2.15 billion a year ago and also outpaced Zacks Consensus Estimate of $2.37 billion. The company witnessed a 4.8% organic revenue growth in parts and services, out of which its North American segment contributed 5%.

LKQ Corporation Price, Consensus and EPS Surprise

Full-Year 2017 Results

LKQ Corp reported adjusted earnings from continuing operations to be around $1.88 per share in 2017, up from $1.69 earned in 2016. The Zacks Consensus Estimate for earnings was $1.89 per share.

In 2017, revenues increased to $9.74 billion from $8.58 billion in 2016. The figure also surpassed Zacks Consensus Estimate of $9.67 billion.

Business Developments

In fourth-quarter 2017, LKQ Corp completed the buyout of Warn Industries. Additionally, it acquired four businesses including automotive glass distributor of Kansas, automotive glass distributor in New Jersey, aftermarket parts distributor of Bosnia and Herzegovina and aftermarket parts distributor in the Netherlands.

Also, during the quarter, European operations of LKQ Corp opened six and nine new branches in Western Europe and Eastern Europe, respectively.

Financial Position

LKQ Corp had cash and cash equivalents of $280 million as of Dec 31, 2017, compared with $227.4 million as of Dec 31, 2016.

At the end of 2017, LKQ Corp had net cash provided by operating activities of around $518.9 million compared with $635 million in the prior year.

2018 Outlook

For 2018, LKQ Corp expects organic revenue growth for parts & services in the range of 4-6% in comparison to 4.1% recorded in 2017.

Further, adjusted net income from continuing operations is expected to be within the range of $720-$750 million, whereas adjusted earnings from continuing operations in 2018 are expected to be in the band of $2.3-$2.4 per share.

Zacks Rank & Key Picks

LKQ Corp has a Zacks Rank #3 (Hold). A few better-ranked stocks in the auto space are General Motors Company (NYSE:GM) , Genuine Parts Company (NYSE:GPC) and PACCAR Inc. (NASDAQ:PCAR) , each carrying a Zacks Rank #2 (Buy). 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 jumped 14.3%.

Genuine Parts has an expected long-term growth rate of 7.2%. In the last six months, shares of the company have gained 13%.

PACCAR has an expected long-term growth rate of 10%. Shares of the company have rallied 8.2% in the past six months.

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