On Mar 23, 2015, shares of Lithia Motors Inc. LAD reached a new 52-week high of $99.50, before eventually closing at $97.81. The closing price represents a year-to-date return of 12.3%.
Share Price Drivers
On Feb 25, Lithia Motors reported a 44.9% rise in adjusted earnings per share to $1.42 in the fourth quarter of 2014 from 98 cents in the corresponding quarter last year. Earnings also surpassed the Zacks Consensus Estimate by 23 cents.
Revenues for the quarter increased 75% to $1.79 billion from $1.02 billion in the year-ago quarter. The improvement was driven by better performance across all segments, with the company’s new vehicle sales being the bright spot. Revenues also surpassed the Zacks Consensus Estimate of $1.72 billion.
Lithia Motors expects earnings in the range of $1.18–$1.21 per share for the first quarter of 2015, and $5.95–$6.05 per share for full-year 2015. The company expects revenues between $7.5 billion and $7.7 billion for 2015, with a 41.5% increase in new vehicle sales and a 36.5% rise in used vehicle sales. Sales from service body and parts will likely increase 41%. Capital expenditure is expected to be $120 million.
Lithia Motors pursues an active share repurchase policy in order to return value to shareholders. The company repurchased 26,729 shares at an average price of $70.52 per share in 2014.
In addition, Lithia Motors benefiting from the expansion of its business through acquisitions. In 2014, the company acquired 35 stores and opened one franchise. So far in 2015, Lithia Motors has opened a new store in the Houston, TX market with Clearlake Subaru.
Lithia Motors currently carries a Zacks Rank #2 (Buy).
Other Stocks to Consider
Other well-performing stocks in the same industry include Asbury Automotive Group, Inc. ABG, Group 1 Automotive Inc. GPI and America's Car-Mart Inc. CRMT. While Asbury Automotive sports a Zacks Rank #1 (Strong Buy), both Group 1 Automotive and America's Car-Mart carry a Zacks Rank #2.
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