Lithia Motors, Inc. (NYSE:LAD) shareholders are probably feeling a little disappointed, since its shares fell 3.7% to US$292 in the week after its latest yearly results. It was a credible result overall, with revenues of US$31b and statutory earnings per share of US$36.29 both in line with analyst estimates, showing that Lithia Motors is executing in line with expectations. This is an important time for investors, as they can track a company’s performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for Lithia Motors
After the latest results, the 13 analysts covering Lithia Motors are now predicting revenues of US$36.6b in 2024. If met, this would reflect a solid 18% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to increase 3.9% to US$37.77. In the lead-up to this report, the analysts had been modelling revenues of US$36.5b and earnings per share (EPS) of US$38.10 in 2024. So it’s pretty clear that, although the analysts have updated their estimates, there’s been no major change in expectations for the business following the latest results.
The analysts reconfirmed their price target of US$354, showing that the business is executing well and in line with expectations. That’s not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Lithia Motors analyst has a price target of US$500 per share, while the most pessimistic values it at US$220. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It’s pretty clear that there is an expectation that Lithia Motors’ revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 18% growth on an annualised basis. This is compared to a historical growth rate of 24% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 5.1% 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 most important thing to take away is that there’s been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. 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. The consensus price target held steady at US$354, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn’t be too quick to come to a conclusion on Lithia Motors. Long-term earnings power is much more important than next year’s profits. 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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Find out whether Lithia Motors is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.
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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.
