LAD

Lithia Motors, Inc.

Industrial/Transportation, Consumer


Presented:07/14/2020
Price:$168.86
Cap:$3.84B
Current Price:$303.66
Cap:$8.12B

Presented

Date07/14/2020
Price$168.86
Market Cap$3.84B
Ent Value$5.64B
P/E Ratio15.17x
Book Value$54.13
Div Yield0.71%
Shares O/S22.76M
Ave Daily Vol261,017
Short Int19.27%

Current

Price$303.66
Market Cap$8.12B
Lithia Motors, Inc. engages in the operation of automotive franchises and retail of new and used vehicles. It operates through the following segments: Domestic, Import and Luxury. The Domestic segment comprises of retail automotive franchises that sell new vehicles manufactured by Chrysler, General Motors, and Ford. The Import segment composes of automotive franchises that sell new vehicles manufactured by Honda, Toyota, Subaru, Nissan, and Volkswagen. The Luxury segment includes retail automotive franchises that sell new vehicles manufactured by BMW, Mercedes-Benz, and Lexus. The company was founded by Walt DeBoer and Sidney B. DeBoer in 1946 and is headquartered in Medford, OR.

Publicly traded companies mentioned herein: CarMax Inc (KMX), Carvana Co (CVNA), Group 1 Automotive Inc (GPI), Lithia Motors Inc (LAD), Vroom Inc (VRM)

Highlights

The presenter is long Lithia Motors Inc (LAD) and several other companies in the auto supply chain. He believes that LAD stands to benefit from strong consumer demand for vehicles in the near term. In addition, LAD represents an extremely valuable call option on what the presenter sees as the convergence between the traditional retailer model and omnichannel. A typical omnichannel presence would allow LAD to offer a seamless buying experience across its brick and mortar locations, online, and mobile. LAD has been developing omnichannel infrastructure for some time, and he expects they will roll out an initiative in Q3, across all of LAD’s business lines which will compete directly against Carvana, Vroom, Shift, and CarMax. As the company discusses their strategies with analysts over the next few months, he anticipates the Street will begin to appreciate the math for massive earnings potential above existing estimates in the longer term. Current estimates for 2020 EPS from the Street are ~$10, while the presenter is at ~$12. He thinks numbers could actually come in higher than his EPS estimate given the rise in used car prices and a potential YoY increase in July unit volumes. Over the next three years, he feels that there is very real multibagger potential. 

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Idea Discussion

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