On Jun 23, 2015, shares of Lithia Motors Inc. LAD reached a 52-week high of $117.11, before eventually closing at $116.20. The closing price represents a year-to-date return of 33.7%.
Share Price Drivers
Share price of Lithia Motors has been mostly moving upward as the company continues to benefit from the expansion of its business through acquisitions and store openings along with recording strong quarterly results.
Lithia Motors reported a 35% increase in adjusted earnings per share to $1.39 in the first quarter of 2015 from $1.03 in the corresponding quarter last year. Earnings also surpassed the Zacks Consensus Estimate by 16 cents. Revenues for the reported quarter surged 66% to $1.79 billion from $1.08 billion in the year-ago quarter. The increase in revenues was driven by better performance across all the segments, with the company’s new vehicle sales being the bright spot. Revenues also surpassed the Zacks Consensus Estimate of $1.78 billion.
Lithia Motors uses its significant cash flow to open new stores every year. In Jan 2015, the company opened a Subaru franchise store in Clearlake, TX. The company expects that this store will add $45 million to its annual revenues. In 2014, the company had acquired 35 stores and opened 1 franchise.
Lithia Motors consistently enhances shareholder value through buybacks and dividend payments. In the first quarter of 2015, the company repurchased 38,445 shares at an average price of $90.87 per share for a total of $3.5 million. Till Mar 31, 2015, Lithia Motors had repurchased 1.54 million shares at an average price of $32.68 per share. As of Mar 31, 2015, the company had 1.46 million shares remaining under its share repurchase authorization. Additionally, in Apr 2015, Lithia Motors’ board approved a 25% increase in its quarterly dividend to 20 cents per share from the prior payout of 16 cents.
Lithia Motors currently carries a Zacks Rank #2 (Buy).
Other Stocks to Consider
Other well-ranked stocks in the auto industry include O'Reilly Automotive Inc. ORLY, U.S. Auto Parts Network, Inc. PRTS and AutoNation, Inc. AN, all carrying a Zacks Rank #2.
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