Lithia Motors: A Cautious Hold Amidst Mixed Financial Signals

Wells Fargo analyst Colin Langan has maintained their neutral stance on LAD stock, giving a Hold rating yesterday.

Colin Langan’s rating is based on a combination of factors that emerged from Lithia Motors’s recent financial performance. The company’s first-quarter earnings per share (EPS) of $6.11 fell short of the consensus estimate, which was a significant factor in the Hold rating. The disappointing earnings were primarily attributed to an increase in Selling, General and Administrative (SG&A) expenses, even though this was somewhat counterbalanced by higher sales figures. The gross margin percentage also decreased, which is a concern, although new vehicle gross profit per unit (GPU) was roughly in line with expectations.

Additionally, Langan likely took into account the mixed results in other key performance indicators such as used vehicle GPU and Finance and Insurance (F&I) per unit, with the former seeing a slight increase and the latter experiencing a substantial decline from the prior quarter. Furthermore, the acquisition of Pendragon and its impact on financials, as well as the lack of annual guidance from the company, might have contributed to the uncertainty, justifying the Hold rating. The expectation that the stock would trend downward following the report due to the earnings miss and these mixed results signals a cautious stance on the part of Langan and Wells Fargo Securities.

LAD’s price has also changed slightly for the past six months – from $249.490 to $248.340, which is a -0.46% drop .

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Lithia Motors (LAD) Company Description:

Lithia Motors, Inc. engages in the operation of automotive franchises and retail of new and used vehicles. It operates through the following segments: Domestic, Import and Luxury. The Domestic segment comprises of retail automotive franchises that sell new vehicles manufactured by Chrysler, General Motors, and Ford. The Import segment composes of automotive franchises that sell new vehicles manufactured by Honda, Toyota, Subaru, Nissan, and Volkswagen. The Luxury segment includes retail automotive franchises that sell new vehicles manufactured by BMW, Mercedes-Benz, and Lexus. The company was founded by Walt DeBoer and Sidney B. DeBoer in 1946 and is headquartered in Medford, OR.