September 19, 2024
Top 10 Stock Lithia Motors Strong Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Lithia Motors – Top 10 Stock in S&P Mid-Cap Index
Lithia Motors is listed as a top 10 stock on September 19, 2024 in the market index S&P MIDCAP because of its high performance in at least one of the Obermatt investment strategies. As all consolidated Obermatt Ranks exhibit excellent performance, including positive market sentiment in the professional investor community, it is a solid stock investment where the risk of paying too much for the shares is limited. Based on the Obermatt 360° View of 89 (top 89% performer), Obermatt assesses an overall strong buy recommendation for Lithia Motors on September 19, 2024.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Automotive Retail |
| Index | S&P MIDCAP |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Lithia Motors Strong Buy
| 360 METRICS | September 19, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 100 |
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| GROWTH | ||||||||
| GROWTH | 55 |
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| SAFETY | ||||||||
| SAFETY | 67 |
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| SENTIMENT | ||||||||
| SENTIMENT | 55 |
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| 360° VIEW | ||||||||
| 360° VIEW | 89 |
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ANALYSIS: With an Obermatt 360° View of 89 (better than 89% compared with alternatives) for 2024, overall professional sentiment and financial characteristics for the stock Lithia Motors are very positive. The 360° View is based on consolidating four consolidated indicators, with all four indicators above average for Lithia Motors. The consolidated Value Rank has an attractive rank of 100, which means that the share price of Lithia Motors is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 100% of alternative stocks in the same industry. The consolidated Growth Rank has a good rank of 55, which means that the company experiences above-average growth momentum when looking at financial metrics such as revenue, profit, and invested capital growth as well as stock returns. The company is also safely financed with a Safety rank of 67. Finally, professional market sentiment is above average compared with other stock investment alternatives with a Sentiment Rank of 55. ...read more
RECOMMENDATION: With a consolidated 360° View of 89, Lithia Motors is better positioned than 89% of all alternative stock investment opportunities based on the Obermatt Method. As all consolidated Obermatt Ranks exhibit excellent performance, such as good value (Value Rank of 100), above-average growth (Growth Rank of 55), safe financing practices (Safety Rank of 67), and a positive market sentiment in the professional investor community (Sentiment Rank of 55), it is a solid stock investment where the risk of paying too much for the shares is limited and disappointments are less likely to occur, unless information not publicly available. High-Value Ranks sometimes indicate that the company's future is challenging. If they are safely financed and have above average growth, and are still a good value, it may indicate that this will not continue. We recommend evaluating whether the future of Lithia Motors is as difficult as the stock’s low price, despite what good growth and safe financing practice suggest. Since the professional community is optimistic, you might have less to worry about, and the stock is just not sufficiently visible, which may indicate good timing right now. ...read more
Sentiment Strategy: Professional Market Sentiment for Lithia Motors positive
ANALYSIS: With an Obermatt Sentiment Rank of 55 (better than 55% compared with alternatives), overall professional sentiment and engagement for the stock Lithia Motors is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with half of the indicators below and half above average for Lithia Motors. Analyst Opinions are at a rank of 79 (better than 79% of alternative investments), which means that currently, stock research analysts tend to recommend a stock investment in the company. Market Pulse is also positive with a rank of 50, which means that the current professional news and professional social networks are positive when discussing this company (more positive news than for 50% of competitors). But Analyst Opinions Change is negative with a below 50 rank of 44, which means that stock research experts are changing their opinions for the worse in recommending the company. In other words, they are getting more critical of investments in Lithia Motors. There are also only so many institutional investors holding company stock with a Professional Investors rank of 25, which means that, currently, professional investors hold less stock in this company than in 75% of alternative investment opportunities. Pros tend to invest in other companies. ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 55 (more positive than 55% compared with investment alternatives), Lithia Motors has a reputation among professional investors that is above-average compared with that of its competitors. The signals are ambivalent. The positive news in the market contradicts the negative change in analyst recommendations. Since the overall analyst recommendations are still above average, the stock may be safer for investing, especially if it is not an extra-large company where Pros tend to be less present. In such a case, the Pro Investor rank is not a problem. ...read more
Value Strategy: Lithia Motors Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 100 (better than 100% compared with alternatives) for 2024, Lithia Motors shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators that are all above average for Lithia Motors. Price-to-Sales is 79 which means that the stock price compared with what market professionals expect for future sales is lower than for 79% of comparable companies, indicating a good value for Lithia Motors's revenue size. The same is valid for expected Price-to-Profits, more favorable than for 92% of alternatives, and this is also true for the Price-to-Book capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 56. Compared with other companies in the same industry, dividend yields of Lithia Motors are expected to be higher than for 77% of all competitors (a Dividend Yield rank of 77). ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 100, is a buy recommendation based on Lithia Motors's stock price compared with the company's operational size and dividend yields. Since all value metrics are above the industry average, there is no objection to investing in Lithia Motors based on its detailed value metrics.
Growth Strategy: Lithia Motors Growth Momentum good
| GROWTH METRICS | September 19, 2024 | |||||||
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| REVENUE GROWTH | ||||||||
| REVENUE GROWTH | 81 |
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| PROFIT GROWTH | ||||||||
| PROFIT GROWTH | 35 |
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| CAPITAL GROWTH | ||||||||
| CAPITAL GROWTH | 57 |
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| STOCK RETURNS | ||||||||
| STOCK RETURNS | 45 |
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| CONSOLIDATED RANK: GROWTH | ||||||||
| CONSOLIDATED RANK: GROWTH | 55 |
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ANALYSIS: With an Obermatt Growth Rank of 55 (better than 55% compared with alternatives), Lithia Motors shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Lithia Motors. Sales Growth has a rank of 81 which means that currently, professionals expect the company to grow more than 81% of its competitors. Capital Growth is also above 35% of competitors with a rank of 57. But Profit Growth only has a rank of 35, which means that currently professionals expect the company to grow its profits less than 65% of its competitors. And Stock Returns have also been below average with a rank of only 45. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 55, is a buy recommendation for growth and momentum investors. Profits are sometimes low if the company invests in the future. The positive revenue and capital investment outlook confirms such an interpretation. Both revenues and capital are solid growth indicators, and lower profits in such a case would be encouraging. But the investors see it differently by punishing the share price. Sometimes, Mister Market is not very reliable, because it is not uncommon for it to be volatile. Investors should look out for signs of growth expenditure that could justify low profit growth, and they may also find reasons why recent stock price developments don't confirm the growth outlook of operations. While operating growth indicators are not perfect, they are more reliable indicators for future performance than stock prices that can repeatedly surprise investors. ...read more
Safety Strategy: Lithia Motors Debt Financing Safety above-average
| SAFETY METRICS | September 19, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 40 |
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| REFINANCING | ||||||||
| REFINANCING | 65 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 56 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 67 |
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ANALYSIS: With an Obermatt Safety Rank of 67 (better than 67% compared with alternatives), the company Lithia Motors has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Lithia Motors is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above-average for Lithia Motors. Refinancing is at 65, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 65% of its competitors. Liquidity is also good at 56, meaning the company generates more profit to service its debt than 56% of its competitors. This indicates that the company is safer when it comes to debt service. However, Leverage is rather large at 40, which means the company has an above-average debt-to-equity ratio. It has more debt than 60% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 67 (better than 67% compared with alternatives), Lithia Motors has a financing structure that is safer than that of its competitors. This is not bad if things go well. The higher debt level means better returns to shareholders if things go well. Many top-performing companies operate with higher debt levels, and Lithia Motors could be in that group. But if you expect the environment to turn rougher, the higher leverage could become a problem. The same is valid if you expect interest rates to rise. That could squeeze shareholder returns, which so far have benefitted from better conditions. ...read more
Combined financial peformance: Lithia Motors Top Financial Performance
| COMBINED PERFORMANCE | September 19, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 100 |
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| GROWTH | ||||||||
| GROWTH | 55 |
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| SAFETY | ||||||||
| SAFETY | 56 |
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| COMBINED | ||||||||
| COMBINED | 89 |
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ANALYSIS: With an Obermatt Combined Rank of 89 (better than 89% compared with investment alternatives), Lithia Motors (Automotive Retail, USA) shares have much better financial characteristics than comparable stocks. Shares of Lithia Motors are a good value (attractively priced) with a consolidated Value Rank of 100 (better than 100% of alternatives), show above-average growth (Growth Rank of 55), and are safely financed (Safety Rank of 67), which means low debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 89, is a strong buy recommendation based on Lithia Motors's financial characteristics. As the company Lithia Motors's key financial metrics all exhibit excellent performance, such as good value (Obermatt Value Rank of 100), above-average growth (Obermatt Growth Rank of 55), and indicate that the company is safely financed (Obermatt Safety Rank of 67), it is a solid stock investment where the risk of paying too much for the share is limited, unless the company has a bleak future. Such good financial performance can indicate that the company's future might actually be challenging, as it may be difficult to maintain the good performance. If they are safely financed and have been growing above average, and are still a good value, it means that the market is keeping prices low, for a reason which may become clearer over time. We recommend evaluating the future of Lithia Motors. If you believe the company's future is market-typical or even better, this could be an argument for a share purchase. ...read more
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