Lithia Motors, Inc. LAD reported adjusted earnings per share of $2.07 in first-quarter 2018, increasing from $2.01 in the prior-year quarter. However, the bottom line missed the Zacks Consensus Estimate of $2.4.
Reportedly, in the quarter, net income rose 3% year over year to $52 million. Revenues in the reported quarter were $2.66 billion, beating the Zacks Consensus Estimate by a slight margin. The figure was $2.24 billion in the year-ago quarter.
Gross profit climbed 19.5% to $408 million in the quarter under review from $341.7 million in the year-ago quarter.
Lithia Motors, Inc. Price, Consensus and EPS Surprise
Lithia Motors witnessed muted demand in January and February, primarily due to severe weather conditions. However, earnings shortfall was recovered to an extent in March. The company anticipates a similar trend throughout 2018 as well.
Quarter in Details
Revenues from new-vehicle retail plunged 20.2% to $1.45 billion in the quarter. New-vehicle retail sales volume expanded 16.5% to 41,497 units. The average selling price of new-vehicle retail rose 3.2% to $35,056 from the year-ago figure of $33,982.
Used-vehicle retail revenues increased 18.8% to $715.6 million in the quarter, whereas revenues from used-vehicle wholesale increased 6.2% to $76 million. Used-vehicle retail sales volume improved 17.3% to 36,114 units. The average selling price of used-vehicle retail sales gained 1.3% to $19,814 from the year-ago figure of $19,563.
Revenues from service body and parts went up 22.8% to $285.7 million. The company’s finance and insurance business recorded 22.7% rise in revenues to $106.5 million. Revenues from fleet and others declined 35.1% to $21.2 million.
Acquisitions & Divestments
In first-quarter 2018, the company added Honda and Acura points in Buffalo, NY; the Day Group in Pittsburgh, PA and six locations from the Prestige Family of Fine Cars in Bergen County, NJ. Also, Lithia Motors divested a Mazda Volvo location in Fresno, CA.
Further, in April, the company added Broadway Ford in Idaho Falls, ID and Buhler Ford in Eatontown, NJ while divesting a Mitsubishi franchise in Fresno, CA.
Financial Details
Lithia Motors had cash and cash equivalents of $69 million as of Mar 31, 2018, up from $57.3 million as of Dec 31, 2017. Long-term debt was $1.81 billion as of Mar 31, 2018, compared with $1 billion as of Dec 31, 2017.
Dividend & Share Repurchases
Lithia Motors announced a quarterly dividend of 29 cents per share, marking year-over-year rise of 7%. The amount will be payable on May 25, 2018, to shareholders of record as of May 11, 2018.
Year to date, the company repurchased 90,000 shares. Further, Lithia Motors is left with $154 million under their existing $250-million share repurchase authorization.
Outlook
For 2018, Lithia Motors raised anticipated earnings to $10.6 per share, an increase from the prior expectation of $10.5. Further, the company expects revenues of $12-$12.5 billion compared with the previous anticipation of $11-$11.5 billion.
Zacks Rank & Other Key Picks
Lithia Motors sports a Zacks Rank #1 (Strong Buy). A few other top-ranked stocks in the auto space are BMW AG BAMXF, Dana Incorporated DAN and Allison Transmission Holdings, Inc. ALSN, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
BMW has expected long-term growth rate of 4.5%. Over a year, shares of the company have gained 13.7%.
Dana has expected long-term growth rate of 10%. Shares of the company have risen 28.1% in the past year.
Allison Transmission has expected long-term growth rate of 10%. Over a year, shares of the company have gained 0.7%.
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