Lithia Motors, Inc. Just Missed EPS By 26%: Here's What Analysts Think Will Happen Next (2024) (Simply Wall St)

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The quarterly results for Lithia Motors, Inc. (NYSE:LAD) were released last week, making it a good time to revisit its performance. Statutory earnings per share fell badly short of expectations, coming in at US$5.89, some 26% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at US$8.6b. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Lithia Motors

Lithia Motors, Inc. Just Missed EPS By 26%: Here's What Analysts Think Will Happen Next (1)

Taking into account the latest results, the consensus forecast from Lithia Motors' 14 analysts is for revenues of US$36.6b in 2024. This reflects a solid 12% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to descend 14% to US$29.32 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$36.6b and earnings per share (EPS) of US$35.39 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.


The consensus price target held steady at US$334, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Lithia Motors, with the most bullish analyst valuing it at US$445 and the most bearish at US$230 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Lithia Motors' revenue growth is expected to slow, with the forecast 17% annualised growth rate until the end of 2024 being well below the historical 24% p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.9% per year. Even after the forecast slowdown in growth, it seems obvious that Lithia Motors is also expected to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Lithia Motors. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Lithia Motors analysts - going out to 2026, and you can see them free on our platform here.

Plus, you should also learn about the 1 warning sign we've spotted with Lithia Motors .

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Lithia Motors, Inc. Just Missed EPS By 26%: Here's What Analysts Think Will Happen Next (2024)
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