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OPENLANE (KAR)
NYSE:KAR
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OPENLANE
(NYSE:KAR)
64Neutral
Positive Factors
Digital Capabilities
KAR's digital capabilities provide it a secular tailwind.
Financial Performance
OPENLANE's financial results for Q1/25 were better than expected, with total revenue increasing by 7% and adjusted EBITDA rising by 10.7%.
Market Share
OPENLANE's dealer business is growing by offering a better, faster, higher value solution at a lower cost representing a highly scalable, competitively differentiated business model.
Negative Factors
Commercial Vehicle Volume Pressure
Management continues to see pressure on commercial vehicle volumes in 2025 due to lower off-lease maturities.
Finance Segment Challenges
Finance segment revenue decreased 4.67% to $106.2 million including a decrease of 13.35% in interest revenue.
Investor Uncertainty
The businesses underlying the KAR ticker have changed materially, which might create uncertainty for some investors.
OPENLANE (KAR) vs. S&P 500 (SPY)
Market Cap
$2.41B
Dividend YieldN/A
Average Volume (3M)885.48K
Price to Earnings (P/E)38.5
Beta (1Y)0.89
Revenue Growth9.42%
EPS GrowthN/A
CountryUS
Employees4,080
SectorConsumer Cyclical
Sector Strength75
IndustryAuto - Dealerships
Share Statistics
EPS (TTM)0.31
Shares Outstanding107,383,670
10 Day Avg. Volume1,044,740
30 Day Avg. Volume885,476
Financial Highlights & Ratios
PEG Ratio1.22
Price to Book (P/B)1.74
Price to Sales (P/S)0.00
P/FCF Ratio9.03
Enterprise Value/Market Cap1.11
Enterprise Value/Revenue0.38
Enterprise Value/Gross Profit3.40
Enterprise Value/Ebitda1.82
Forecast
1Y Price Target
$23.75Price Target Upside5.74% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering4
OPENLANE Business Overview & Revenue Model
Company DescriptionKar Auction Services (KAR) is a leading provider of vehicle auction services and related technology solutions in North America. The company operates through its extensive network of physical and digital auction platforms, facilitating the exchange of used and salvaged vehicles. KAR serves a diverse range of customers, including automotive manufacturers, financial institutions, insurance companies, and dealers, by offering a comprehensive suite of services aimed at streamlining the vehicle remarketing process.
How the Company Makes MoneyKAR generates revenue primarily through transaction fees and ancillary services provided during vehicle auctions. The company's auction platforms, such as ADESA, charge sellers a fee for listing vehicles and buyers a fee upon successful purchase. In addition to these fees, KAR offers value-added services, including vehicle inspection, reconditioning, transportation, and financing solutions, which contribute to its revenue stream. The company's digital auction platforms enhance its reach and operational efficiency, allowing for higher transaction volumes and customer engagement. Strategic partnerships with automotive manufacturers and financial institutions further bolster its earnings by ensuring a steady supply of vehicles and expanding its customer base.
OPENLANE Financial Statement Overview
Summary
Kar Auction Services is showing signs of recovery with strong revenue growth and improved profitability metrics. The company's cash flow is robust, supporting operational needs and investment capabilities. However, the balance sheet reflects a need for cautious management of debt and equity to ensure long-term stability.Income Statement
Kar Auction Services shows a positive trend in revenue growth with a 8.71% increase over the past year, indicating recovery. The gross profit margin is healthy at 46.54%, reflecting operational efficiency. Net profit margin improved to 6.14%, a significant turnaround from the previous year's loss. EBIT and EBITDA margins are at 10.19% and 21.06% respectively, showing improvement but still reflecting moderate operational challenges.67
Positive
Balance Sheet
The debt-to-equity ratio stands at 0.21, which is manageable but suggests reliance on debt financing. Return on equity (ROE) is 8.19%, indicating moderate profitability relative to shareholder equity. The equity ratio is 39.03%, showing a relatively balanced capital structure. However, the decrease in stockholders' equity over time is a concern.60
Neutral
Cash Flow
The company displays strong cash flow management with a 30.73% increase in free cash flow year-over-year. The operating cash flow to net income ratio of 2.66 highlights robust cash generation from operations. Free cash flow to net income ratio is 2.18, showing effective conversion of earnings into cash.72
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 1.83B | 1.79B | 1.65B | 1.52B | 2.25B | 2.19B | Gross Profit |
| 787.20M | 832.20M | 777.50M | 685.10M | 951.70M | 902.90M | EBIT |
| 164.70M | 182.20M | -5.20M | 173.70M | 210.60M | 136.40M | EBITDA |
| 386.40M | 274.90M | 110.80M | 258.00M | 237.40M | 325.60M | Net Income Common Stockholders |
| 128.30M | 109.90M | -154.10M | 28.60M | 66.50M | 500.00K |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 0.00 | 143.00M | 93.50M | 225.70M | 190.00M | 752.10M | Total Assets |
| 0.00 | 4.62B | 4.73B | 5.12B | 7.42B | 6.80B | Total Debt |
| 284.00M | 282.90M | 427.40M | 573.70M | 2.18B | 2.22B | Net Debt |
| 284.00M | 139.90M | 333.90M | 348.00M | 1.99B | 1.47B | Total Liabilities |
| 3.43B | 3.28B | 3.40B | 2.99B | 5.31B | 4.63B | Stockholders Equity |
| 1.37B | 1.34B | 1.94B | 2.13B | 2.10B | 2.17B |
| Cash Flow | Free Cash Flow | ||||
| 265.10M | 238.40M | 183.40M | -473.40M | 304.70M | 283.00M | Operating Cash Flow |
| 317.10M | 292.80M | 235.40M | -412.50M | 413.20M | 384.40M | Investing Cash Flow |
| -95.00M | -70.90M | -83.50M | 2.14B | -1.22B | -326.60M | Financing Cash Flow |
| 152.10M | -173.90M | -279.90M | -1.61B | 210.40M | 194.80M |
OPENLANE Technical Analysis
Positive
22.46
Price Trends
19.83
Positive
20.22
Positive
18.94
Positive
Market Momentum
0.85
Negative
74.45
Negative
86.22
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KAR, the sentiment is Positive. The current price of 22.46 is above the 20-day moving average (MA) of 19.90, above the 50-day MA of 19.83, and above the 200-day MA of 18.94, indicating a bullish trend. The MACD of 0.85 indicates Negative momentum. The RSI at 74.45 is Negative, neither overbought nor oversold. The STOCH value of 86.22 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for KAR.
OPENLANE Risk Analysis
OPENLANE disclosed 37 risk factors in its most recent earnings report. OPENLANE 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
OPENLANE Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $683.58M | 16.17 | 9.35% | ― | 2.24% | -57.33% | |
71 Outperform | $421.52M | 56.70 | 1.50% | ― | -2.26% | ― | |
69 Neutral | $2.91B | ― | -16.49% | ― | 32.89% | 7.44% | |
64 Neutral | $2.41B | 38.50 | 5.46% | ― | 9.42% | ― | |
61 Neutral | $6.97B | 11.38 | 2.88% | 3.90% | 2.64% | -22.07% | |
58 Neutral | $442.11M | 6.63 | 0.12% | ― | 40.31% | -204.86% | |
40 Underperform | $827.14M | ― | 260.24% | ― | 9.33% | 50.69% |
* Consumer Cyclical Sector Average
Performance Comparison
KAR
OPENLANE
22.46
5.06
29.08%
CRMT
America's Car-Mart
51.02
-11.03
-17.78%
CARS
Cars
10.87
-7.63
-41.24%
UXIN
Uxin
4.40
1.33
43.32%
CANG
Cango
4.26
2.70
173.08%
ACVA
ACV Auctions
16.87
-2.01
-10.65%
OPENLANE Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q1-2025)
| % Change Since: 17.16%|
Next Earnings Date:Aug 05, 2025
Earnings Call Sentiment Positive
The earnings call conveyed a positive outlook for OPENLANE, highlighting strong performance and growth in the marketplace and finance segments, alongside strategic initiatives and robust cash flow. While there are challenges such as a decline in commercial vehicle volumes and potential tariff impacts, the company appears well-positioned to navigate these issues.Q1-2025 Updates
Positive Updates
Record Performance in Marketplace Business
OPENLANE delivered a strong start to 2025, with record performance particularly within the marketplace business. Consolidated revenue grew by 7%, and adjusted EBITDA reached $83 million.
Dealer-to-Dealer Volume Growth
Dealer-to-dealer volumes increased by 15% year-over-year, marking the second straight quarter of double-digit growth, contributing to solid growth in auction fee revenue and adjusted EBITDA.
Finance Segment Achievements
The Finance segment grew total loan transaction units, held the loan-loss rate to 1.5%, and increased adjusted EBITDA by 15% over the prior year.
Share Repurchase Authorization
The OPENLANE Board of Directors replaced the prior $100 million share repurchase authorization with a new larger $250 million authorization extending through 2026.
Strong Cash Flow from Operations
OPENLANE generated $123 million in cash flow from operations during the first quarter of 2025.
Technology and Customer Experience Enhancements
The launch of the One App in the US achieved its intended goals, and Canadian OPENLANE Pro subscription programs gained momentum. NPS scores improved across all geographies.
Negative Updates
Decline in Commercial Vehicle Volumes
Total volumes were down 2%, driven entirely by a 14% decrease in commercial volumes, although this was anticipated and previously communicated.
Potential Tariff Impacts
The potential impacts of tariffs present a mix of positives and negatives. If new car supply is disrupted, it could create headwinds for the industry, affecting the volatility of used vehicle values.
Company Guidance
During the first quarter of 2025, OPENLANE reported a 7% increase in consolidated revenue, reaching $460 million, and achieved $83 million in adjusted EBITDA. The company generated $123 million in cash flow from operations. In its Marketplace segment, dealer-to-dealer volumes rose by 15% year-over-year, marking the second consecutive quarter of double-digit growth, despite a 14% decline in commercial vehicle volumes. This growth contributed to a 10% increase in marketplace revenue and a 14% rise in auction fee revenue. In the Finance segment, total loan transaction units increased, with a loan-loss rate held at 1.5%, the lowest since Q4 of 2022, leading to a 15% increase in adjusted EBITDA from the previous year. Amidst broader market uncertainties, including tariffs, OPENLANE maintained its 2025 adjusted EBITDA guidance of $290 million to $310 million and announced a new $250 million share repurchase authorization extending through 2026.OPENLANE Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
OPENLANE Appoints New CFO to Drive Growth
Positive
Apr 22, 2025
On April 22, 2025, OPENLANE, Inc. announced the appointment of Bradley Herring as Executive Vice President and Chief Financial Officer, effective May 27, 2025. Herring, who brings over 30 years of experience in financial operations and investor relations, will lead all financial and investor-facing functions at OPENLANE. His appointment is expected to enhance the company’s financial strategy and support its vision to lead the digital transformation of the wholesale used vehicle market. This strategic move is anticipated to strengthen OPENLANE’s market position and deliver growth and value to its customers and shareholders.
Spark’s Take on KAR Stock
According to Spark, TipRanks’ AI Analyst, KAR is a Neutral.
Kar Auction Services is recovering well with strong revenue growth and robust cash flow, but faces challenges with its high P/E ratio and technical indicators suggesting bearish trends. The company’s strategic focus on technology and dealer engagement bodes well for long-term growth, but macroeconomic challenges may pose risks.
To see Spark’s full report on KAR stock, click here.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.