Lithia Motors, Inc. Just Missed EPS By 26%: Here's What Analysts Think Will Happen Next (2024)
editorial-team@simplywallst.com (Simply Wall St)
·3-min read
The quarterly results for Lithia Motors, Inc. (NYSE:LAD) were released last week, making it a good time to revisit its performance. Statutory earnings per share fell badly short of expectations, coming in at US$5.89, some 26% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at US$8.6b. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the consensus forecast from Lithia Motors' 14 analysts is for revenues of US$36.6b in 2024. This reflects a solid 12% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to descend 14% to US$29.32 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$36.6b and earnings per share (EPS) of US$35.39 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.
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The consensus price target held steady at US$334, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Lithia Motors, with the most bullish analyst valuing it at US$445 and the most bearish at US$230 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Lithia Motors' revenue growth is expected to slow, with the forecast 17% annualised growth rate until the end of 2024 being well below the historical 24% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.9% per year. Even after the forecast slowdown in growth, it seems obvious that Lithia Motors is also expected to grow faster than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Lithia Motors. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Lithia Motors analysts - going out to 2026, and you can see them free on our platform here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Shares of new and used car dealership Lithia Motors (LAD) fell sharply on Wednesday. Lithia suffered a Q1 earnings miss. LAD stock may also struggle amid broader consumer market challenges.
As an eligible Lithia & Driveway employee, you can purchase up to $25,000 worth of stock at market value in any calendar year though the ESPP. This equals $21,250 in payroll deductions, taking the 15% discount into account.
General Motors Company, Jim Koons Management and Lithia Motors Inc. have agreed to settle separate Federal Trade Commission administrative complaint allegations that each touted how rigorously they inspect their cars, yet failed to disclose that some of the used cars they were selling were subject to unrepaired safety ...
The main competitors of Lithia Motors include CarMax (KMX), Penske Automotive Group (PAG), AutoNation (AN), Asbury Automotive Group (ABG), Group 1 Automotive (GPI), Advance Auto Parts (AAP), Sonic Automotive (SAH), Monro (MNRO), America's Car-Mart (CRMT), and O'Reilly Automotive (ORLY).
Lithia is one of America's largest automotive retailers featuring most domestic and import franchises. Our stores serve urban and rural populations throughout the United States. We are focused on providing customers with an honest and simpler buying and service experience.
On average, Wall Street analysts predict that Lithia Motors's share price could reach $298.22 by Jul 22, 2025. The average Lithia Motors stock price prediction forecasts a potential upside of 15.68% from the current LAD share price of $257.80.
Lithia Motors, Inc. (NYSE:LAD) is a leading automotive retailer in the United States, operating through a network of dealerships offering new and used vehicles, vehicle maintenance, repair services, and automotive financing. The company serves a wide customer base across various states.
For many people, participating in their company's ESPP will indeed turn out to be worth it. That's because the great majority of plans do offer a discount, and many additionally offer a lookback.
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The current decline in lithium prices can be primarily attributed to the slowing growth of electric vehicle sales in China. This is coupled with the broader slowdown in the Chinese economy. As demand remains sluggish at previous pricing levels and supply surpasses demand, prices have inevitably fallen.
The company, which has rebranded as MDA Space, says its profit amounted to 11 cents per diluted share for the quarter ended March 31, down from a profit of 13 cents per diluted share in the same quarter last year. Revenue for the quarter totalled $209.1 million, up from $201.9 million in the first quarter of 2023.
Summary. The stock is plummeting and investors should avoid it, as the company's execution has been lacking and its Q3 results were disappointing. The company's revenue is falling year-over-year, but its aggressive cost-cutting campaign may help achieve breakeven EBITDA for Q4.
The 35 analysts offering price forecasts for Lithia Motors have a median target of 307.54, with a high estimate of 470.00 and a low estimate of 198.00. The median estimate represents a 85.66 difference from the last price of 263.43.
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