Lithia Motors Earnings Preview

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Investors are on the edges of their seats, hoping that Lithia Motors (NYS: LAD) will top analyst expectations for the fifth consecutive quarter. The company will unveil its latest earnings on Wednesday, Oct. 26. Lithia Motors is an operator of automotive franchises and a retailer of new and used vehicles and services. It sells new and used cars and light trucks and provides vehicle maintenance, warranty, paint, and repair services.

What analysts say:

  • Buy, sell, or hold?: Analysts strongly back Lithia Motors, with three of four rating it a buy and the remainder rating it a hold. Analysts like Lithia Motors better than competitor Asbury Automotive Group overall. Analysts still rate the stock a moderate buy, but they are a bit more wary about it compared to three months ago.
  • Revenue Forecasts: On average, analysts predict $686.4 million in revenue this quarter. That would represent a rise of 17.8% from the year-ago quarter.
  • Wall Street Earnings Expectations: The average analyst estimate is earnings of $0.48 per share. Estimates range from $0.46 to $0.50.

What our community says:
CAPS All-Stars are solidly behind the stock, with 80.8% assigning it an "outperform" rating. The community at large agrees with the All-Stars, with 78.7% giving it a rating of "outperform." Fools are keen on Lithia Motors, though the message boards have been quiet lately with only 53 posts in the past 30 days. Despite the majority sentiment in favor of Lithia Motors, the stock has a middling CAPS rating of three out of five stars.

Management:
Revenue has now gone up for three straight quarters.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross, operating, and net margins over the past four quarters. 

QuarterQ2Q1Q4Q3
Gross Margin17.4%17.4%17.1%18.0%
Operating Margin4.4%3.4%2.3%4.0%
Net Margin2.2%1.4%0.8%1.7%
For all our Lithia Motors-specific analysis, including earnings and beyond, add Lithia Motors to My Watchlist.

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