Lithia Motors (LAD): Reassessing Valuation as Weak Store Traffic and High Leverage Weigh on the Long-Term Story

Simply Wall St.12-21 10:27

Fresh commentary on Lithia Motors (LAD) is putting a spotlight on its weaker same store sales and high leverage, and the stock is reacting as investors reassess how durable its growth story really is....

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However, that sits against a slightly negative year to date share price return and a modestly negative 1 year total shareholder return. This suggests momentum is...","collect":0,"end_time":0,"defaultTopTitle":"simplywall.st","property":[],"viewcount":null,"language":"en","relate_stocks":{"LU0274383776.USD":"MANULIFE GF US SMALL CAP EQUITY \"AA\" (USD) INC","BK4214":"汽车零售","BK4561":"索罗斯持仓","LAD":"利西亚车行"},"translate_title":"Lithia Motors(LAD)：重新评估估值，因为商店客流量疲软和高杠杆影响了长期发展","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"LAD":1.5},"content_text":"Fresh commentary on Lithia Motors (LAD) is putting a spotlight on its weaker same store sales and high leverage, and the stock is reacting as investors reassess how durable its growth story really is. See our latest analysis for Lithia Motors. The stock has enjoyed a solid 30 day share price return of 13.69 percent to about $343.89. However, that sits against a slightly negative year to date share price return and a modestly negative 1 year total shareholder return. This suggests momentum is improving but still fragile as investors balance growth ambitions with execution and balance sheet risks. If Lithia’s mixed momentum has you reassessing your car retail exposure, this could be a good moment to explore other auto manufacturers that might offer a different blend of growth and resilience. With the shares still trading below analyst targets and some models pointing to a sizeable intrinsic discount, is the market overlooking Lithia’s long term cash generation potential, or already baking in all the growth and balance sheet risk? Most Popular Narrative: 12.7% Undervalued With Lithia Motors' fair value estimate sitting modestly above the last close, the narrative implies the market is still underpricing its long term earnings power.  The analysts have a consensus price target of $389.6 for Lithia Motors based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $500.0, and the most bearish reporting a price target of just $310.0.  Read the complete narrative. Curious how steady mid single digit growth, slightly rising margins and a lower than industry earnings multiple can still support a higher valuation? The full narrative unpacks the specific revenue, earnings and discount rate assumptions that bridge today’s price to that higher fair value. Result: Fair Value of $394.13 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, stubbornly weak same store sales and persistently high SG&A could derail margin expansion and force the market to reassess growth and valuation assumptions. Find out about the key risks to this Lithia Motors narrative.  Build Your Own Lithia Motors Narrative If you would rather stress test the assumptions yourself instead of leaning on this view, you can quickly build a personalised thesis in minutes, Do it your way. A great starting point for your Lithia Motors research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision. Looking for more investment ideas? Before you move on, consider your next move with data backed stock ideas from the Simply Wall Street Screener so you can systematically review a wide range of opportunities.  Explore early stage potential by scanning these 3631 penny stocks with strong financials that pair low share prices with balance sheets and fundamentals that can be evaluated in more detail. Review structural growth trends by focusing on these 29 healthcare AI stocks that blend healthcare demand with innovation in diagnostics, treatment and patient management. Assess your income strategy by targeting these 12 dividend stocks with yields > 3% that offer yields supported by cash flows that can be analyzed for payout sustainability.   This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    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\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.Mobile Infrastructure for Defense and DisasterThe next wave in robotics isn't humanoid. Its fully autonomous towers delivering 5G, ISR, and radar in under 30 minutes, anywhere.Get the investor briefing before the next round of contractsSponsored On Behalf of CiTechNew: AI Stock Screener & AlertsOur new AI Stock Screener scans the market every day to uncover opportunities.• Dividend Powerhouses (3%+ Yield)• Undervalued Small Caps with Insider Buying• High growth Tech and AI CompaniesOr build your own from over 50 metrics.Explore Now for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. 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