We recently published 10 Stocks Jim Cramer Discussed As He Asserted He Could Beat The Government’s Numbers. Lithia Motors, Inc. (NYSE:LAD) is one of the stocks Jim Cramer recently discussed.
Lithia Motors, Inc. (NYSE:LAD) is a car retailer that rang the opening bell on the day this program was aired. The firm’s shares have lost 9.7% year-to-date. However, the shares have gained 8.7% since the firm’s investor presentation and earnings report at July end. The results saw Lithia Motors, Inc. (NYSE:LAD)’s earnings per share of $9.24 beat analyst estimates of $10.24 but miss revenue estimates of $9.69 billion by posting $9.58 billion. As the firm rang the opening bell, Cramer recalled that he had bought a car with Lithia Motors, Inc. (NYSE:LAD):
“By the way I actually bought a car at Lithia, so I’m like a, Lithia’s a metaphor, it’s a town. . .that’s where Brian Deboer’s from, he lived very close to my daughter. But my daughter did not live in the same style of Brian Doboer, the CEO of Lithia. . .she lived in a tent, she lived outside.
“Okay I’m just saying that the company that rang the bell, I bought a car from, for my daughter. Because she lived in Ashland.”
Copyright: sonyae / 123RF Stock Photo
River Road Small-Mid Cap Value Fund discussed Lithia Motors, Inc. (NYSE:LAD) in its Q4 2024 investor letter. Here is what the firm said:
“Another top contributor during the quarter was Lithia Motors, Inc. (NYSE:LAD) one of the largest global automotive retailers operating in North America and the United Kingdom. In late June, the auto industry was impacted by a cyberattack on CDK Global’s dealership management system, which runs all back-office functions at Lithia as well as over 85% of all franchised dealers in the United States. In its Q2 2024 earnings release, LAD reported a -6.4% decline in same-store sales, driven primarily by a -4.7% decline in new vehicle units as LAD was not able to process sale transactions late in the quarter due to the CDK outage. Despite lower same-store sales, LAD outperformed expectations as its cost reduction initiatives and a shift in capital allocation resulted in sequential margin improvement and a lower share count. The company achieved its $150MM in annualized cost savings target ahead of schedule and now expects to double these savings by the end of 2024 through further inventory optimization and reductions. This will result in the all-important SG&A as a percentage gross profit declining to the mid-60s range and in line with LAD’s long-term target. Acquisitions have added $27B in annualized revenues since 2020, ahead of LAD’s goal of adding $25B in acquired revenues by 2025. Given the current high private market multiples for auto dealerships, LAD’s management has shifted its capital allocation toward share repurchases, buying back 2.9% of the company in Q2. With low net leverage of 2.3x and year-to-date free cash flow of $740MM, we expect management to continue repurchasing shares aggressively. During the quarter, we added to the position prior to its Q2 results.”
While we acknowledge the risk and potential of LAD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than LAD and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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