Lithia Motors Inc (LAD) stock analysis

P/E above its 5-year median

Lithia Motors's P/E of 9.0 is above its own 5-year median of 8.5.

P/E below the industry

Lithia Motors's P/E of 9.0 is below the Retail-auto dealers & gasoline stations median of 12.5.

EV/EBITDA below its 5-year median

Lithia Motors's EV/EBITDA of 3.6 is below its 5-year median of 4.7.

P/B below the industry

Lithia Motors's price-to-book of 1.02 is below the Retail-auto dealers & gasoline stations median of 2.37.

Trading below fair value

The share price of $312.25 is below our fair value estimate of $475.73.

Margin of safety over 20%

The price is 34.4% below fair value, more than the 20% cushion we look for.

Revenue growing 10%+ a year

Revenue grew 10.1% a year over the last three fiscal years.

EPS growing under 10% a year

Diluted EPS grew -9.9% a year over the last three fiscal years.

Earnings growth not accelerating

Net income grew -11.9% over the last twelve months, against a 5-year average of 11.7% a year.

Growing faster than the industry

Revenue grew 1.6% over the last twelve months; the Retail-auto dealers & gasoline stations median is 1.5%.

Company guidance

No outlook found in earnings releases from the last twelve months.

Gross margin slipping

Gross margin was 15.1% over the last twelve months, against 15.2% a year earlier.

Return on equity under 15%

Return on equity was 11.8% over the last twelve months and averaged 19.4% over five years; we look for 15% on both.

Return on capital over 10%

Return on invested capital was 17.5%, above the 10% that usually covers the cost of capital.

Return on equity below the industry

Lithia Motors's return on equity of 11.8% is below the Retail-auto dealers & gasoline stations median of 12.4%.

Earnings grew over 5 years

Net income grew 11.7% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 2.1% over the last twelve months, against a 5-year average of 3.3%.

Net margin below the industry

Lithia Motors's net margin of 2.1% is below the Retail-auto dealers & gasoline stations median of 2.6%.

Debt level

Needs debt and equity figures.

Debt trend

Needs a balance sheet from five years ago with positive equity.

Debt coverage

Needs operating cash flow.

Interest well covered

Operating income covers interest expense 5.7 times.

Short-term assets don't cover short-term debts

Current assets are 1.00 times current liabilities.

Bankruptcy risk in the grey zone

The Altman Z-score is 2.16; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

Lithia Motors paid dividends worth 0.6% of the share price over the last twelve months.

Yield below Treasuries

The 0.6% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Lithia Motors yields 0.6%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 6.9% of net income.

Cash-flow cover

Needs dividends paid and free cash flow.