Expect a Strong Show From Lithia (LAD) This Earnings Season
Lithia Motors LAD is slated to release first-quarter 2022 results on Apr 20, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings and revenues is pegged at $9.63 per share and $6.03 billion, respectively.
The auto retailer came up with better-than-expected results in the last reported quarter on the back of higher-than-expected revenues from new vehicle, used vehicle (retail and wholesale), and fleet and others segments. In fact, Lithia surpassed earnings estimates in the last four quarters, with the average being 30.6%. This is depicted in the graph below:
Lithia Motors, Inc. Price and EPS Surprise
Lithia Motors, Inc. price-eps-surprise | Lithia Motors, Inc. Quote
Investors are expecting the auto retailer to maintain its earnings beat streak and encouragingly, our model also predicts the same.
Trend in Estimate Revisions
The Zacks Consensus Estimate for first-quarter earnings per share has moved 12 cents north in the past 30 days. The metric indicates a significant year-over-year jump of 63.5%. Further, the Zacks Consensus Estimate for quarterly revenues suggests year-over-year growth of 38.9%.
Earnings Whispers
Our proven model predicts an earnings beat for Lithia this time around as well. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is +8.80%. This is because the Most Accurate Estimate for earnings per share is pegged 85 cents higher than the Zacks Consensus Estimate.
Zacks Rank: Lithia currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Things to Note
Courtesy of economic recovery from the pandemic lows and preference for personal mobility, demand for vehicles has been on the rise, which is likely to have aided sales of Lithia. A spree of strategic buyouts is expected to have enhanced Lithia’s product portfolio and market share. Also, we expect Lithia’s Driveway e-commerce program to have significantly buoyed the firm’s first-quarter revenues.
Even though tight inventory may have played a spoilsport to some extent, the rising average selling price for new and used cars amid supply-demand mismatch is likely to have fueled first-quarter revenues.
The Zacks Consensus Estimate for revenues in the used vehicle business is $2,360 million, indicating a significant increase from $1,487 million recorded in the year-ago period. The consensus mark for revenues from the new vehicle segment stands at $2,476 million, suggesting 12.9% year-over-year growth. The Zacks Consensus Estimate for revenues from Finance & Insurance is pegged at $269 million, implying a year-over-year improvement of 35.8%.
Higher year-over-year projected gross margins for used vehicle retail also augur well. The consensus mark for first-quarter 2022 gross margins in the used vehicle retail segment is pegged at 13.2%, signaling an increase from 7.1% recorded in the corresponding period of 2021. The Zacks Consensus Estimate for gross margin in the used vehicle retail segment is 11.44%, implying an uptick from 10.1% recorded in the comparable year-ago period.
Other Stocks With Favorable Combination
Here are a few other stocks in the auto space, which, according to our model, also have the right combination of elements to post an earnings beat for the quarter to be reported:
Allison Transmission ALSN has an Earnings ESP of +10.35% and a Zacks Rank #3. The stock is set to report first-quarter 2022 earnings on Apr 27.
The Zacks Consensus Estimate for Allison’s to-be-reported quarter’s earnings and revenues is pegged at $1.16 per share and $642 million, respectively. Encouragingly, ALSN surpassed earnings estimates in the last four quarters, with an average of 13.4%.
LKQ Corp LKQ has an Earnings ESP of +0.37% and a Zacks Rank #3. The stock is set to report first-quarter 2022 earnings on Apr 28.
The Zacks Consensus Estimate for LKQ’s to-be-reported quarter’s earnings and revenues is pegged at 91 cents per share and $3.28 billion, respectively. Encouragingly, LKQ surpassed earnings estimates in the last four quarters, with an average of 33.9%.
Cummins, Inc. CMI has an Earnings ESP of +1.68% and a Zacks Rank #3. The stock is set to report first-quarter 2022 earnings on May 3.
The Zacks Consensus Estimate for Cummins’ to-be-reported quarter’s earnings and revenues is pegged at $3.55 per share and $6.02 billion, respectively. Over the trailing four quarters, CMI surpassed earnings estimates twice for as many misses, with an average surprise of 0.5%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Cummins Inc. (CMI) : Free Stock Analysis Report
Allison Transmission Holdings, Inc. (ALSN) : Free Stock Analysis Report
Lithia Motors, Inc. (LAD) : Free Stock Analysis Report
LKQ Corporation (LKQ) : Free Stock Analysis Report
To read this article on Zacks.com click here.
