# Lithia Motors (LAD) Sector: Auto dealerships | Field | Value | |---|---| | Price | $288.69 | | Market cap | $6.2B | | Intrinsic value source | Analysts | | Data as of | 2026-10-29 | | Next earnings | 2027-02-10 (estimate) | Analysts: Bullish Picks: Top pick Discount category: Well below intrinsic value ## In short The market prices Lithia Motors for lower profit per vehicle and higher debt, and growth in used vehicles, aftersales and finance income with falling leverage can close the gap over several years. ## Themes and gap - Themes: Interest rates (interest-rates), High debt (leverage), Tariffs and trade (trade-tariffs) - Gap type: Slow (slow) - Why: Earnings depend on the car market cycle, so the gap closes over several years as used vehicles, aftersales and finance income grow; the Q4 2026 report in February 2027 is the next test. ## About Lithia Motors, which operates as Lithia & Driveway, is the largest automotive retailer in the world. It sells new and used vehicles, arranges finance and insurance, and offers parts and service through dealerships in the United States, Canada and the United Kingdom. It also has Driveway, an online sales channel, and Driveway Finance Corporation, which lends to car buyers. Revenue was a record $37.63 billion in 2025. The company is based in Medford, Oregon. ## Thesis The market prices Lithia Motors for lower profit per vehicle and for more debt. Adjusted net income fell 5% in Q3 2026, although adjusted diluted EPS rose 9% because the company bought back 8.7% of its shares in 2026. Net debt rose to 3.07 times trailing adjusted EBITDA at September 30, 2026, from 2.63 times a year earlier, and trailing adjusted EBITDA fell 4.4%. Tariffs and high interest rates can also lower new vehicle demand and margins. For the gap to close, three things must be true. Used vehicle and aftersales gross profit must keep growing, as they did in Q3 2026. Driveway Finance must keep growing its income with good credit quality. Net debt to adjusted EBITDA must fall again as earnings grow, while buybacks continue. The Q4 2026 report, expected in February 2027, gives the next test. Results through 2027 show if earnings can grow while new vehicle margins fall. The gap can close slowly over several years. The main reason it may not close is a weaker car market, which lowers margins and raises leverage. ## Checkpoints - Feb 10, 2027 (estimate): Q4 2026 results: earnings and leverage. Status: Pending. Watch: Higher adjusted EPS than the $6.74 of Q4 2025, growth in used vehicle and aftersales gross profit and lower net debt to adjusted EBITDA pass; lower adjusted net income and leverage above 3.1 times fail. ## Balance sheet - Cash: $184M - Debt: $5.2B - Net debt: $5.0B - EBITDA, last 12 months: $1.6B - Net debt / EBITDA: 3.1× (medium) - Last debt due: 2031 Lithia funds its vehicle inventory with floor plan debt and its car loans with warehouse facilities and non-recourse notes. Total debt was $16.26 billion at September 30, 2026: $6.57 billion was related to inventory and $4.51 billion to financing operations. The rest, $5.18 billion, includes senior notes of $2.35 billion due from 2027 to 2031, the revolving line of credit of $1.74 billion and real estate mortgages. The company reports net debt of $4.99 billion, after cash and marketable securities of $184 million, and trailing adjusted EBITDA of $1.63 billion, so net debt to adjusted EBITDA was 3.07 times, up from 2.63 times a year earlier. The $400 million of 4.625% senior notes are due in 2027. Liquidity, which includes cash, marketable securities and availability on revolving lines of credit, was about $1.4 billion. There were 21,620,296 shares outstanding on October 28, 2026. As of 2026-09-30. Sources: - https://www.sec.gov/Archives/edgar/data/1023128/000102312826000057/a2026q3exx99earningsrelease.htm - https://www.sec.gov/Archives/edgar/data/1023128/000102312826000060/lad-20260930.htm - https://www.sec.gov/Archives/edgar/data/1023128/000102312826000020/lad-20260227.htm ## Dividends - Dividend yield: 0.8% (last 12 months, at the current price) - Paid per share, last 12 months: $2.37 (4 payments) - Current annual rate: $2.80 ($0.70 x 4 a year) - Payout ratio: 7% of the earnings of the last fiscal year (the year ended 2025-12-31) - Latest ex-dividend date: 2026-08-07, $0.70 per share - Growth over the last 5 years: 12.4% a year - Growth over the last 10 years: 10.2% a year Dividends per share by year: 2016: $0.95, 2017: $1.06, 2018: $1.14, 2019: $1.19, 2020: $1.22, 2021: $1.36, 2022: $1.61, 2023: $1.92, 2024: $2.09, 2025: $2.18. Source: company filings and market data, read on 2026-10-29. ## Recent events - 2026-10-21: Lithia reported Q3 2026 results. Revenue rose 3% to a record $9.9 billion. Diluted EPS was $13.22, including a gain on its investment in Pinewood Technologies, and adjusted diluted EPS rose 9% to $10.34. Adjusted net income fell 5% to $229.3 million. Financing Operations income rose 69% to $32.3 million. The company raised its quarterly dividend 7% to $0.75. CEO Bryan DeBoer also became Chairman, and founder Sidney DeBoer became Vice Chairman. - 2026-07-29: Lithia reported Q2 2026 results. Revenue rose 2% to a record $9.8 billion, and adjusted diluted EPS rose 9% to $10.03. The company bought back 3.7% of its shares in the quarter, added $500 million to its repurchase authorization and raised its quarterly dividend 23% to $0.70. - 2026-04-29: Lithia reported Q1 2026 results. Revenue rose 1% to $9.3 billion. Diluted EPS fell 46% to $4.28, mainly because of a loss on its investment in Pinewood Technologies, and adjusted diluted EPS fell 7% to $7.34. The company bought back 4.0% of its shares in the quarter. - 2026-02-27: Lithia amended its main credit agreement with U.S. Bank. The facility now runs to February 27, 2031. - 2026-02-11: Lithia reported 2025 results. Revenue rose 4.0% to a record $37.63 billion, and adjusted diluted EPS rose 15.7% to $33.46. Q4 adjusted diluted EPS fell 12% to $6.74. The company bought back 11.4% of its shares in 2025 and acquired businesses with $2.4 billion of expected annual revenue. ## Latest news and filings - Last earnings: 2026-10-21 (8-K: https://www.sec.gov/Archives/edgar/data/1023128/000102312826000057/) - Next earnings: 2027-02-10 (expected; the company has not confirmed it) | Filed | Form | Headline | Period end | XBRL document | Link | | --- | --- | --- | --- | --- | --- | | 2026-10-28 | 10-Q | Quarterly report for the period ended Sep 30, 2026 | 2026-09-30 | lad-20260930 | https://www.sec.gov/Archives/edgar/data/1023128/000102312826000060/lad-20260930.htm | | 2026-10-21 | 8-K | Earnings release and Other company news | | lad-20261021 | https://www.sec.gov/Archives/edgar/data/1023128/000102312826000057/lad-20261021.htm | | 2026-09-25 | 8-K | Change of directors or officers | | lad-20260925 | https://www.sec.gov/Archives/edgar/data/1023128/000102312826000053/lad-20260925.htm | | 2026-07-29 | 10-Q | Quarterly report for the period ended Jun 30, 2026 | 2026-06-30 | lad-20260630 | https://www.sec.gov/Archives/edgar/data/1023128/000102312826000051/lad-20260630.htm | | 2026-07-29 | 8-K | Earnings release and Other company news | | lad-20260729 | https://www.sec.gov/Archives/edgar/data/1023128/000102312826000047/lad-20260729.htm | | 2026-05-01 | 8-K | Shareholder vote results | | lad-20260430 | https://www.sec.gov/Archives/edgar/data/1023128/000102312826000039/lad-20260430.htm | | 2026-04-29 | 10-Q | Quarterly report for the period ended Mar 31, 2026 | 2026-03-31 | lad-20260331 | https://www.sec.gov/Archives/edgar/data/1023128/000102312826000036/lad-20260331.htm | | 2026-04-29 | 8-K | Earnings release and Other company news | | lad-20260429 | https://www.sec.gov/Archives/edgar/data/1023128/000102312826000031/lad-20260429.htm | | 2026-03-04 | 8-K | New material agreement | | lad-20260227 | https://www.sec.gov/Archives/edgar/data/1023128/000102312826000020/lad-20260227.htm | | 2026-02-25 | 10-K | Annual report for the period ended Dec 31, 2025 | 2025-12-31 | lad-20251231 | https://www.sec.gov/Archives/edgar/data/1023128/000102312826000015/lad-20251231.htm | Every filing on SEC EDGAR (CIK 1023128): https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001023128&type=&dateb=&owner=include&count=40 ## Risks - High: Car sales follow the economy and interest rates. Tariffs, high rates or a recession can lower vehicle demand and gross profit per vehicle. Adjusted net income fell 5% in Q3 2026. - Medium: Net debt rose to 3.07 times trailing adjusted EBITDA at September 30, 2026, from 2.63 times a year earlier. Floor plan debt also rose to $6.57 billion. Higher debt limits buybacks and acquisitions if earnings fall. - Medium: Driveway Finance Corporation lends to car buyers. Its receivables grew to $5.58 billion. Higher credit losses in a weaker economy can lower its income. - Low: Lithia holds shares of Pinewood Technologies, which cause large gains and losses in reported EPS. Reported EPS can move a lot from quarter to quarter. ## Links - Page: https://picks.utilarium.app/company/LAD/ - History of changes: https://picks.utilarium.app/company/LAD/history/ - JSON with full history: https://picks.utilarium.app/data/company/LAD.json > Picks is a personal record of stock picks. 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