Lithia Motors (NYSE:LAD) Stock Price Up 14.5% Following Strong Earnings

Key Points

• Lithia Motors shares jumped 14.5% after the company reported quarterly EPS of $10.03, beating the $8.73 consensus estimate by $1.30. Revenue increased 2.2% year over year.
• The board authorized a $500 million share-repurchase program, allowing the company to buy back up to 7.9% of its outstanding shares.
• Analysts maintain a generally positive outlook, with eight Buy ratings and four Holds; the stock has a consensus rating of “Moderate Buy” and an average price target of $380.33.

Lithia Motors, Inc. (NYSE:LAD - Get Free Report)'s share price traded up 14.5% during trading on Wednesday following a stronger than expected earnings report. The company traded as high as $407.00 and last traded at $410.2550. Approximately 140,350 shares were traded during mid-day trading, a decline of 54% from the average session volume of 307,375 shares. The stock had previously closed at $358.31.

The company reported $10.03 earnings per share (EPS) for the quarter, topping the consensus estimate of $8.73 by $1.30. Lithia Motors had a return on equity of 12.49% and a net margin of 1.88%.During the same quarter in the prior year, the company posted $10.24 earnings per share. Lithia Motors's revenue was up 2.2% on a year-over-year basis.

Lithia Motors declared that its board has authorized a stock repurchase program on Tuesday, May 26th that authorizes the company to buyback $500.00 million in shares. This buyback authorization authorizes the company to reacquire up to 7.9% of its shares through open market purchases. Shares buyback programs are usually a sign that the company's board believes its stock is undervalued.

Wall Street Analysts Forecast Growth

A number of analysts recently commented on LAD shares. Citigroup increased their price objective on Lithia Motors from $326.00 to $365.00 and gave the company a "buy" rating in a research note on Friday, May 1st. Barclays cut their target price on shares of Lithia Motors from $370.00 to $360.00 and set an "overweight" rating for the company in a research note on Wednesday, July 15th. UBS Group upped their target price on shares of Lithia Motors from $348.00 to $370.00 and gave the company a "buy" rating in a report on Friday, July 10th. JPMorgan Chase & Co. lifted their price target on shares of Lithia Motors from $320.00 to $325.00 and gave the stock a "neutral" rating in a report on Thursday, May 7th. Finally, Weiss Ratings raised shares of Lithia Motors from a "hold (c-)" rating to a "hold (c)" rating in a research report on Tuesday, July 21st. Eight analysts have rated the stock with a Buy rating and four have given a Hold rating to the company's stock. Based on data from MarketBeat, the company has an average rating of "Moderate Buy" and a consensus price target of $380.33.

Insider Activity at Lithia Motors

In related news, Director Shauna Mcintyre sold 245 shares of the stock in a transaction that occurred on Monday, May 11th. The shares were sold at an average price of $294.64, for a total transaction of $72,186.80. Following the completion of the sale, the director owned 1,846 shares of the company's stock, valued at approximately $543,905.44. This represents a 11.72% decrease in their position. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through the SEC website. Also, Director Richard J. Bailey, Jr. sold 297 shares of the stock in a transaction on Tuesday, May 26th. The stock was sold at an average price of $280.57, for a total transaction of $83,329.29. Following the completion of the sale, the director directly owned 760 shares of the company's stock, valued at $213,233.20. The trade was a 28.10% decrease in their position. The disclosure for this sale is available in the SEC filing. Insiders have sold 782 shares of company stock valued at $229,572 in the last ninety days. 1.08% of the stock is currently owned by company insiders.

Institutional Inflows and Outflows

Several institutional investors and hedge funds have recently made changes to their positions in the company. Norges Bank purchased a new stake in Lithia Motors during the 4th quarter worth $125,214,000. River Road Asset Management LLC boosted its position in Lithia Motors by 33.6% in the 4th quarter. River Road Asset Management LLC now owns 742,677 shares of the company's stock valued at $246,814,000 after buying an additional 186,628 shares during the last quarter. Life Cycle Investment Partners Ltd purchased a new position in Lithia Motors in the 4th quarter valued at about $58,409,000. Corient Private Wealth LLC grew its stake in shares of Lithia Motors by 8,474.0% during the fourth quarter. Corient Private Wealth LLC now owns 107,690 shares of the company's stock valued at $35,789,000 after acquiring an additional 106,434 shares in the last quarter. Finally, Marshall Wace LLP increased its position in shares of Lithia Motors by 183.6% during the fourth quarter. Marshall Wace LLP now owns 162,937 shares of the company's stock worth $54,149,000 after acquiring an additional 105,478 shares during the last quarter.

Lithia Motors Stock Performance

The firm has a market cap of $9.43 billion, a price-to-earnings ratio of 14.51, a PEG ratio of 0.81 and a beta of 1.26. The company has a quick ratio of 0.24, a current ratio of 0.99 and a debt-to-equity ratio of 1.41. The company has a 50 day moving average of $305.81 and a 200 day moving average of $294.24.

Lithia Motors Company Profile

Lithia Motors, Inc is an American automotive retailer headquartered in Medford, Oregon. Founded in 1946 as a small auto body and glass shop, the company has grown through organic expansion and strategic acquisitions to become one of the largest automotive retail networks in North America. Lithia operates dealerships across the United States and Canada, offering a broad portfolio of new and pre-owned vehicles from more than 40 different manufacturers.

The company's core business activities include vehicle sales, financing, insurance, parts and service.

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