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Lithia Motors Beats Street Estimates and Reaffirms FY 2017 Revenues, Raises FY 2017 EPS Outlook

Jason BondJason Bond ·

Lithia Motors Inc (NYSE: LAD) shares were up over 11% today, after the company reported its highest first quarter earnings per share (EPS) and revenue in company history. Moreover, the company raised its full year 2017 diluted EPS guidance. Let’s get right into its earnings.

Lithia Motors 1Q 2017 Financial Results

Lithia Motors reported 1Q 2017 unadjusted net income of $50.7M, up 26% from $40.3M in the same period in the 2016 fiscal year. Consequently, it had an unadjusted net income per diluted share of $2.01, a 30% increase from $1.55 for the first quarter of the prior fiscal year. Now, the company reported an adjusted net income of $45M, a 12% increase from 1Q 2016. In turn, Lithia Motors adjusted net income per diluted share of $1.78, a 15% increase from its adjusted net income per share in the same period in the 2016 fiscal year.

The company showed some growth rates in its operations. Lithia’s total same store sales grew by 3%, used vehicle retail same store sales increase by 6%, and service, body and parts same store sales grew by 8%.

As stated earlier, Lithia Motors raised its FY 2017 EPS guidance. The company expects its FY 2017 diluted EPS to come in between a range of $8.05 and $8.35, up from its previous guidance of $8 and $8.30. The company reaffirmed its FY 2017 revenue guidance, which is projected to be between a range of $9.2B and $9.4B. Lithia Motors also projected new vehicle same store sales to increase by 1.5%, used vehicle same store sales to increase by 5.5%, and service body and parts same store sales to grow by 5%.

LAD Statistics and Valuation

The stock traded between $87.19 and $94.00  today. LAD traded between $68.70 and $105.32 , over the past 52 weeks. Consequently, LAD is  currently just over 11% off its 52-week high and over 30% above its 52-week low. LAD broke above its 20-, 50- and 200-day SMA, after its earnings release and FY 2017 guidance raise.

Here’s a look at the stock’s performance on the daily chart:

Source: Investing.com

LAD has a book value per share (BVPS) of 36.22, and therefore, it has a price-to-book ratio of around 2.60. Additionally, it has forward price-to-revenue, based on next year’s revenues estimates, of around 0.24. Based on next year’s earnings estimates, LAD has a forward price-to-earnings ratio of approximately 11.4. Moreover, it has a P/S of 0.24. Now, in relation to the industry average, LAD is considered to be undervalued, according to these ratios. Lithia Motors Inc. has 23.9 million shares outstanding, 23.19M shares floating and a short ratio of 8.61%.

Final Thoughts

Lithia Motors reported strong 1Q 2017 revenues and earnings, relative to its previous financial results. Additionally, it reaffirmed its FY 2017 revenue guidance and raised its FY 2017 EPS outlook, which may have been the main catalyst that sent shares higher.

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