Lithia Motors (LAD)
NYSE:LAD
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Lithia Motors
(NYSE:LAD)
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Rating:66Neutral
Price Target:
$314.00
▲(10.94% Upside)
Action:Reiterated
Date:05/02/26
The score is driven primarily by solid financial performance (strong revenue growth and improved TTM cash generation, albeit with margin compression and elevated leverage). Earnings-call commentary is moderately positive due to finance-business scaling and capital returns, while technicals are improving but still mixed versus longer-term averages. Valuation is reasonable on P/E but supported less by a low dividend yield.
Positive Factors
Captive finance scaling
Rapid scaling of Driveway Finance builds a recurring, higher-margin earnings stream that diversifies Lithia away from pure vehicle retail cyclicality. A $5B portfolio, rising originations and improving NIM indicate structural ability to convert sales into financing income and buffer downturns via earned interest and F&I profits.
Negative Factors
Elevated leverage
High debt relative to equity reduces financial flexibility in a cyclical auto retail industry, increasing interest-cost sensitivity and constraining the company's ability to pursue opportunistic acquisitions or absorb volume shocks. This leverage raises refinancing and liquidity risk during downturns.
Read all positive and negative factors
Positive Factors
Negative Factors
Captive finance scaling
Rapid scaling of Driveway Finance builds a recurring, higher-margin earnings stream that diversifies Lithia away from pure vehicle retail cyclicality. A $5B portfolio, rising originations and improving NIM indicate structural ability to convert sales into financing income and buffer downturns via earned interest and F&I profits.
Read all positive factors
Lithia Motors (LAD) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$6.73B
Dividend Yield0.64%
Average Volume (3M)302.54K
Price to Earnings (P/E)10.4
Beta (1Y)0.99
Revenue Growth2.37%
EPS Growth-10.19%
CountryUS
Employees30,000
SectorConsumer Cyclical
Sector Strength84
IndustryAuto - Dealerships
Share Statistics
EPS (TTM)28.63
Shares Outstanding22,805,820
10 Day Avg. Volume319,497
30 Day Avg. Volume302,544
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 Cap3.33
Enterprise Value/Revenue0.59
Enterprise Value/Gross Profit3.90
Enterprise Value/Ebitda10.60
Forecast
1Y Price Target
$337.89Price Target Upside19.38% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering11
EPS Forecast (FY)34.44
Revenue Forecast (FY)$38.42B
Lithia Motors 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...
How the Company Makes Money
Lithia Motors makes money primarily by monetizing multiple revenue streams tied to automotive retail and ownership lifecycle services. (1) New-vehicle sales: Lithia sells new vehicles through franchised dealerships representing various automaker b...
Lithia Motors Earnings Call Summary
Earnings Call Date:Apr 29, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Jul 22, 2026
Earnings Call Sentiment Positive
The call highlighted multiple operating strengths — record revenue and EPS, clear progress scaling the captive finance business (DFC), sequential improvements in used retail and aftersales, strong UK performance, and aggressive capital returns — demonstrating resilience and an omnichannel advantage. However, meaningful near-term headwinds remain (new vehicle revenue and GPU declines, adjusted EBITDA down 9% YoY, SG&A as a percent of gross higher YoY), and some positive cash flow was supported by a one-time benefit. Management outlined concrete structural initiatives (cost discipline, Pinewood AI, sales/service reorganization) that should drive improvements but will take time to fully materialize. On balance, the highlights and growth levers conveyed on the call outweigh the lowlights tied to cyclical margin pressure and near-term comps, supporting a constructive outlook if execution continues.Positive Updates
Record Revenue and Strong EPS
Reported record revenues of $9.3 billion for Q1 FY2026 and adjusted diluted EPS of $7.34, demonstrating resilient top-line performance and high-quality earnings versus macro and weather headwinds.
Negative Updates
New Vehicle Sales and GPU Pressure
New vehicle revenue declined 7.1% year-over-year with units down 7.1%; new vehicle GPU was $2,722, down $227 year-over-year, reflecting a tough comp (tariff avoidance pull-forward in prior year) and compression in new-vehicle margins (luxury -10.2%, domestic -8.7%, imports -5.4% YoY).
Read all updates
Q1-2026 Updates
Positive
Negative
Record Revenue and Strong EPS
Reported record revenues of $9.3 billion for Q1 FY2026 and adjusted diluted EPS of $7.34, demonstrating resilient top-line performance and high-quality earnings versus macro and weather headwinds.
Read all positive updates
Company Guidance
Management’s forward-looking guidance emphasized scaling Driveway Finance toward a 20%+ penetration target (portfolio now $5.0B; record originations $840M in Q1; financing operations income $21M, +71% YoY; NIM 4.8%, +20 bps; annualized provision rate ~3%; avg origination FICO ~750; origination LTV ~95%), continued opportunistic buybacks while shares trade below intrinsic value (repurchased ~$259M in Q1, retiring ~4% of shares at an average ~$275; ~ $300M allocated to repurchases this quarter), disciplined M&A (targeting 15–30% of revenue purchase prices or ~3–6x normalized EBITDA and >15% after‑tax hurdle), a Pinewood DMS/AI pilot in the U.S. late this year with broader North American rollout planned, and a multi‑pronged cost plan to drive adjusted SG&A down toward the mid‑ to high‑50s percent of gross profit over time as GPUs stabilize — all intended to compound durable EPS and free‑cash‑flow growth and convert more vehicle sales into recurring, countercyclical income.Lithia Motors Financial Statement Overview
Summary
Income Statement
72
Positive
Balance Sheet
58
Neutral
Cash Flow
66
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 37.73B | 37.63B | 36.19B | 31.04B | 28.19B | 22.83B |
| Gross Profit | 5.74B | 5.73B | 5.56B | 5.23B | 5.15B | 4.26B |
| EBITDA | 2.11B | 2.30B | 2.26B | 2.16B | 2.19B | 1.78B |
| Net Income | 710.50M | 819.60M | 802.00M | 1.00B | 1.25B | 1.06B |
Balance Sheet | ||||||
| Total Assets | 25.75B | 25.11B | 23.13B | 19.63B | 15.01B | 11.15B |
| Cash, Cash Equivalents and Short-Term Investments | 421.30M | 341.80M | 402.20M | 941.40M | 246.70M | 174.80M |
| Total Debt | 16.13B | 14.69B | 13.86B | 11.33B | 7.99B | 4.96B |
| Total Liabilities | 19.34B | 18.48B | 16.45B | 13.35B | 9.76B | 6.48B |
| Stockholders Equity | 6.38B | 6.60B | 6.66B | 6.21B | 5.21B | 4.63B |
Cash Flow | ||||||
| Free Cash Flow | -453.10M | 5.80M | 73.70M | -702.60M | -913.20M | 1.54B |
| Operating Cash Flow | -73.80M | 356.70M | 425.10M | -472.40M | -610.10M | 1.80B |
| Investing Cash Flow | -1.15B | -1.03B | -1.85B | -1.27B | -1.33B | -2.89B |
| Financing Cash Flow | 1.22B | 612.10M | 907.60M | 2.41B | 2.04B | 1.11B |
Lithia Motors Technical Analysis
Neutral
283.04
Price Trends
286.17
Positive
282.57
Positive
301.78
Negative
Market Momentum
4.73
Positive
53.44
Neutral
22.90
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LAD, the sentiment is Neutral. The current price of 283.04 is below the 20-day moving average (MA) of 297.21, below the 50-day MA of 286.17, and below the 200-day MA of 301.78, indicating a neutral trend. The MACD of 4.73 indicates Positive momentum. The RSI at 53.44 is Neutral, neither overbought nor oversold. The STOCH value of 22.90 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for LAD.
Lithia Motors Risk Analysis
Lithia Motors disclosed 31 risk factors in its most recent earnings report. Lithia Motors 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
Lithia Motors Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
69 Neutral | $11.51B | 13.19 | 16.41% | 3.14% | 1.24% | -5.59% | |
66 Neutral | $6.73B | 10.38 | 10.63% | 0.64% | 2.37% | -10.19% | |
63 Neutral | $3.65B | 7.05 | 14.15% | ― | 4.83% | 33.96% | |
63 Neutral | $6.30B | 10.31 | 28.44% | ― | 1.94% | 9.88% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
59 Neutral | $3.75B | 12.21 | 11.04% | 0.49% | 7.17% | -26.51% | |
58 Neutral | $7.43B | 32.24 | 3.67% | ― | -3.30% | -58.01% |
* Consumer Cyclical Sector Average
LAD
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Lithia Motors Corporate Events
Business Operations and StrategyExecutive/Board ChangesShareholder Meetings
Lithia Motors Shareholders Reinforce Leadership and Governance Structure
Positive
May 1, 2026
On April 30, 2026, Lithia Motors held its 2026 Annual Meeting of Shareholders, where investors elected all ten nominated directors, including Executive Chairman Sidney B. DeBoer and CEO Bryan B. DeBoer, with solid majorities despite some higher op...
Business Operations and StrategyStock BuybackDividendsFinancial Disclosures
Lithia Motors Posts Record Revenue Amid Earnings Pressure
Negative
Apr 29, 2026
On April 29, 2026, Lithia Driveway reported first-quarter 2026 results showing record revenue of $9.3 billion, driven by higher used-vehicle and aftersales performance, alongside record originations of $840 million at Driveway Finance Corporation...
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.