Lithia Motors Inc (LAD, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $292.53, Lithia Motors Inc has witnessed a daily loss of 2.98%, marked against a three-month change of 4.87%. A thorough analysis, underlined by the GuruFocus Score Rating, suggests that Lithia Motors Inc is well-positioned for substantial growth in the near future.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Here are the key components of Lithia Motors Inc's GF Score:
- Financial strength rank: 5/10
- Profitability rank: 9/10
- Growth rank: 10/10
- GF Value rank: 10/10
- Momentum rank: 6/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With a high profitability rank and an impressive growth rank, GuruFocus assigned Lithia Motors Inc the GF Score of 94 out of 100, which signals the highest outperformance potential.
Company Overview: Lithia Motors Inc
Lithia Motors Inc, with a market cap of $8.06 billion and sales of $29.33 billion, is a leading retailer of new and used vehicles and related services. The company offers over 45 brands of vehicles at about 350 stores globally, including 28 U.S. states at year-end 2022. It entered Canada in mid-2021 with the purchase of Pfaff Automotive and expanded to the U.K. in 2023 with the acquisition of Jardine and Pendragon. Founded in 1946 and public since 1996, Lithia Motors Inc is now the largest U.S. auto dealer, based in Medford, Oregon.
Profitability Rank Breakdown
The Profitability Rank shows Lithia Motors Inc's impressive standing among its peers in generating profit. The company's Operating Margin has increased by 81.79% over the past five years, indicating its growing efficiency in managing its operational costs. Furthermore, Lithia Motors Inc's Gross Margin has seen a consistent rise over the past five years, underscoring the company's growing proficiency in transforming revenue into profit. The company's strong Predictability Rank of 4.5 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Lithia Motors Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 22.5%, which outperforms better than 86.7% of 1203 companies in the Vehicles & Parts industry. Moreover, Lithia Motors Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 41.3, and the rate over the past five years is 34.1. This trend accentuates the company's continued capability to drive growth.
Conclusion
Given Lithia Motors Inc's strong financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential outperformance. This analysis underscores the company's robust financial health and its potential to deliver substantial returns to investors. Therefore, Lithia Motors Inc presents a compelling investment opportunity for those seeking to capitalize on its growth trajectory and market leadership.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
