What Happened?
Shares of automotive retailer Lithia Motors (NYSE: LAD) jumped 5.1% in the afternoon session after the company reported record third-quarter revenue and a significant increase in earnings per share.
The automotive retailer announced record third-quarter revenue of $9.7 billion. Its adjusted diluted earnings per share came in at $9.50, a 17% increase from the same period in the previous year. The company saw strong growth across its business, with same-store total revenue up 7.7%, used vehicle revenue up 11.8%, and aftersales gross profit rising 9.1%. Adding to the positive results, Lithia also repurchased 5.1% of its outstanding shares during the quarter, signaling confidence in its own stock.
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What Is The Market Telling Us
Lithia’s shares are somewhat volatile and have had 11 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 28 days ago when the stock dropped 6.1% as investor sentiment soured on the used-car retail sector as competitor CarMax reported weak second-quarter results that missed expectations. CarMax, a major industry player, announced that its profit and sales for the quarter ending August 31 fell short of analyst forecasts. The company's used-car sales dipped 7.2% to $5.271 billion, and same-store sales dropped by 6.3%. CarMax's earnings per share came in at 64 cents, significantly below the expected $1.04. The poor performance from a key competitor raised concerns about challenging market conditions for the entire used-car industry, weighing on shares of peer companies. Separately, it was reported that Lithia sold its BMW Portland dealership to Swickard Auto Group.
Lithia is down 6.7% since the beginning of the year, and at $325.21 per share, it is trading 17.5% below its 52-week high of $394.27 from November 2024. Investors who bought $1,000 worth of Lithia’s shares 5 years ago would now be looking at an investment worth $1,299.
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