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Driveway Vehicle Solutions
(NYSE:LAD)
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Rating:66Neutral
Price Target:
$332.00
▼(-10.31% Downside)
Action:Reiterated
Date:08/06/26
The score is held back primarily by weaker financial quality—especially negative TTM operating/free cash flow alongside elevated leverage and margin compression. Offsetting this, the stock’s technical setup is strong (price above major moving averages with positive momentum), valuation looks reasonable on P/E, and the latest earnings call conveyed constructive guidance and execution progress (cost reduction, DFC scaling, and shareholder returns).
Positive Factors
Strong Revenue Growth
The sharp re-acceleration in revenue demonstrates substantial business scale and continued demand for the company’s offerings. A larger revenue base can support operating leverage, expand financing and aftersales opportunities, and provide greater resources for acquisitions and technology investment over the next several quarters.
Negative Factors
Elevated Leverage
High leverage reduces financial flexibility in a cyclical, inventory- and rate-sensitive business. If vehicle demand or margins weaken, debt obligations can constrain acquisitions, technology investment, and shareholder returns while increasing the company’s exposure to refinancing and earnings volatility.
Read all positive and negative factors
Positive Factors
Negative Factors
Strong Revenue Growth
The sharp re-acceleration in revenue demonstrates substantial business scale and continued demand for the company’s offerings. A larger revenue base can support operating leverage, expand financing and aftersales opportunities, and provide greater resources for acquisitions and technology investment over the next several quarters.
Read all positive factors
Driveway Vehicle Solutions (LAD) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.77B
Dividend Yield0.77%
Average Volume (3M)261.61K
Price to Earnings (P/E)10.2
Beta (1Y)1.00
Revenue Growth1.97%
EPS Growth-10.60%
CountryUS
Employees30,000
SectorConsumer Cyclical
Sector Strength84
IndustryAuto - Dealerships
Share Statistics
EPS (TTM)30.30
Shares Outstanding21,983,116
10 Day Avg. Volume381,423
30 Day Avg. Volume261,613
Financial Highlights & Ratios
PEG Ratio1.14
Price to Book (P/B)1.27
Price to Sales (P/S)0.22
P/FCF Ratio1.45K
Enterprise Value/Market Cap3.36
Enterprise Value/Revenue0.60
Enterprise Value/Gross Profit5.44
Enterprise Value/Ebitda16.14
Forecast
1Y Price Target
$436.08Price Target Upside17.81% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering12
EPS Forecast (FY)36.21
Revenue Forecast (FY)$38.40B
Driveway Vehicle Solutions Business Overview & Revenue Model
Company Description
Lithia Motors, Inc. operates as a prominent automotive retail enterprise throughout the United States. Its business is strategically divided into three key segments: Domestic, Import, and Luxury vehicle sales. The company's comprehensive offerings...
Driveway Vehicle Solutions Earnings Call Summary
Earnings Call Date:Jul 29, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Oct 21, 2026
Earnings Call Sentiment Positive
The call highlighted multiple meaningful positives: record revenue and EPS, substantial sequential and YoY improvements in vehicle GPUs (notably used), strong aftersales margins, rapid scaling and profitability of Driveway Finance Corporation, significant cash generation and shareholder returns, and tangible SG&A progress driven by AI and operational changes (with UK performance validating the technology pathway). Lowlights were largely manageable: modest declines in same-store revenue and gross profit versus an unusually strong prior-year quarter, slight new vehicle volume pressure, and SG&A still above the company’s long-term target. Overall, the positive operational momentum, financial outcomes and clear execution plan outweigh the transitory headwinds and remaining work to reach longer-term SG&A goals.Positive Updates
Record Revenue and Earnings
Revenue of $9.8 billion and adjusted diluted EPS of $10.03, up 9% year-over-year, marking another record quarter for Lithia & Driveway.
Negative Updates
Same-Store Revenue and Gross Profit Pressure vs Tough Comp
Same-store revenues declined 1.6% and total gross profit declined 2.7% year-over-year, with management noting these results were versus an exceptionally strong Q2 2025 comparable period (tariff pull-forward).
Read all updates
Q2-2026 Updates
Positive
Negative
Record Revenue and Earnings
Revenue of $9.8 billion and adjusted diluted EPS of $10.03, up 9% year-over-year, marking another record quarter for Lithia & Driveway.
Read all positive updates
Company Guidance
Management said momentum should continue into H2 with explicit targets and near‑term expectations: long‑term earnings leverage of $2 of EPS per $1B of revenue, a sub‑60% SG&A target (adjusted SG&A was 68.6% this quarter, down 290 bps sequentially from Q1 with personnel costs improving ~30 bps), and DFC penetration targeted at 20%+ (North American penetration at 18% this quarter). Key operating and financials cited as context and guidance drivers include revenue of $9.8B, adjusted diluted EPS $10.03 (+9% YoY), same‑store revenues -1.6% and total gross profit -2.7%, total vehicle GPU $4,119 (up ~$200 sequentially) with new GPU $2,718 (stable) and used GPU $2,019 (up $339 sequentially), used GP +1.2% and aftersales GP +3.1% with aftersales margin 59.2% (+120 bps YoY). DFC guidance/trajectory: record originations $884M, financing operations income $37M, NIM 4.8% (+20 bps YoY), managed receivables >$5B, avg origination FICO 748 and front‑end LTV 96%, and expectations that margins and penetration will keep building. Capital allocation guidance remains opportunistic: repurchases are top priority (Q2 buybacks $242M, ~4% of shares retired; share count down ~17% YoY; avg repurchase price $284), dividend raised 23% to $0.70, H1 acquisitions added $765M revenue (divestitures $120M), M&A buy price targets 15–30% of revenue or 3–6x normalized EBITDA (historical returns >25% vs 15% hurdle), and a stated plan to balance ~1/3 buybacks, ~1/3 M&A and the remainder for dividends/internal investment.Driveway Vehicle Solutions Financial Statement Overview
Summary
Income Statement
63
Positive
Balance Sheet
54
Neutral
Cash Flow
33
Negative
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 37.94B | 37.63B | 36.19B | 31.04B | 28.19B | 22.83B |
| Gross Profit | 4.19B | 5.73B | 5.56B | 5.23B | 5.15B | 4.26B |
| EBITDA | 1.41B | 2.30B | 2.26B | 2.16B | 2.19B | 1.78B |
| Net Income | 714.40M | 819.60M | 802.00M | 1.00B | 1.25B | 1.06B |
Balance Sheet | ||||||
| Total Assets | 26.25B | 25.11B | 23.13B | 19.63B | 15.01B | 11.15B |
| Cash, Cash Equivalents and Short-Term Investments | 363.90M | 341.80M | 402.20M | 941.40M | 246.70M | 174.80M |
| Total Debt | 16.56B | 14.69B | 13.86B | 11.33B | 7.99B | 4.96B |
| Total Liabilities | 19.82B | 18.48B | 16.45B | 13.35B | 9.76B | 6.48B |
| Stockholders Equity | 6.43B | 6.60B | 6.66B | 6.21B | 5.21B | 4.63B |
Cash Flow | ||||||
| Free Cash Flow | -504.30M | 5.80M | 73.70M | -702.60M | -913.20M | 1.54B |
| Operating Cash Flow | -148.80M | 356.70M | 425.10M | -472.40M | -610.10M | 1.80B |
| Investing Cash Flow | -1.06B | -1.03B | -1.85B | -1.27B | -1.33B | -2.89B |
| Financing Cash Flow | 1.18B | 612.10M | 907.60M | 2.41B | 2.04B | 1.11B |
Driveway Vehicle Solutions Technical Analysis
Negative
370.15
Price Trends
355.74
Negative
327.27
Negative
311.11
Negative
Market Momentum
-16.53
Positive
37.55
Neutral
50.91
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LAD, the sentiment is Negative. The current price of 370.15 is above the 20-day moving average (MA) of 329.51, above the 50-day MA of 355.74, and above the 200-day MA of 311.11, indicating a bearish trend. The MACD of -16.53 indicates Positive momentum. The RSI at 37.55 is Neutral, neither overbought nor oversold. The STOCH value of 50.91 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LAD.
Driveway Vehicle Solutions Risk Analysis
Driveway Vehicle Solutions disclosed 31 risk factors in its most recent earnings report. Driveway Vehicle Solutions reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Driveway Vehicle Solutions Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $13.40B | 15.02 | 16.43% | 2.76% | 4.13% | -5.43% | |
66 Neutral | $6.77B | 10.16 | 10.91% | 0.77% | 1.97% | -10.60% | |
65 Neutral | $3.16B | 6.57 | 13.04% | ― | 4.12% | -2.47% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
56 Neutral | $5.37B | 7.37 | 33.18% | ― | -0.06% | 35.87% | |
54 Neutral | $2.98B | 10.38 | 9.96% | 0.86% | 0.81% | -33.60% | |
53 Neutral | $1.99B | 9.85 | 20.45% | 2.51% | 5.25% | 37.36% |
* Consumer Cyclical Sector Average
LAD
Driveway Vehicle Solutions
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Driveway Vehicle Solutions Corporate Events
Executive/Board Changes
Driveway Vehicle Solutions Announces Routine Board Member Resignation
Neutral
Sep 25, 2026
On September 25, 2026, board member Heidi L. O’Neill resigned from Lithia Motors’ Board of Directors, effective the same day, citing personal reasons. The company emphasized that her departure did not stem from any disagreement over op...
Business Operations and StrategyStock BuybackDividendsFinancial DisclosuresM&A Transactions
Lithia Motors Reports Record Q2 Revenue and Earnings
Positive
Jul 29, 2026
On July 29, 2026, Lithia Driveway reported second quarter 2026 results showing record revenue of $9.8 billion, a 2% year-over-year increase, with diluted earnings per share rising 17% to $11.54 and adjusted diluted EPS up 9% to $10.03. Despite ad...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.