olivLaw · US equity research
Lithia & Driveway (LAD) LAD
Retail-Auto Dealers & Gasoline Stations · SIC 5500 · Vertical: Retail-Auto Dealers & Gasoline Stations (SIC 5500)
Lithia & Driveway (LAD) is the largest global automotive retailer, combining showroom sales, online platforms, captive finance and aftersales service in one model. It has grown through acquisitions and matters now because new vehicle margins are normalizing while service and finance make up a growing share of profit.
The AI analysis may be outdated: new filings came after its sources (see the «AI analysis» section).
At the close of 04 Nov 2026, Lithia & Driveway (LAD) (LAD) stock was 315.64 USD (+5.65% on the day), with market capitalisation 6.8 bn USD, P/E 9.1 on diluted EPS of 34.69 USD over the last 12 months, dividend yield 0.75%, beta 0.90, 52-week range 243.00–427.48 USD. Latest reported quarter (Q3 2026): revenue of 9.9 bn USD (+2.8% YoY), net income of 291.1 m USD (+34.1% YoY), diluted EPS 13.22 USD.
Data as of · AI analysis dated · Source: SEC filings and closing prices, computed by olivLaw.
Price history
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Technical reading
- RSI (14)
- 56.5
- strong (55–70)
- Bollinger (20, 2)
- 273.92 – 312.06
- above the upper band · %B 1.09 · band width 13.0%
- SMA 50 / 200
- 318.65 / 307.08
- mixed trend
- MACD (12, 26, 9)
- -2.23 / -6.69
- MACD above signal
Indicators describe past prices; on their own they do not predict direction. On our history the RSI ≤ 40 filter added no return (see the signals methodology).
Performance
| Company | S&P 500 | vs S&P 500 | Vertical median | |
|---|---|---|---|---|
| 1 month | +4.2% | −1.1% | +5.3 pp | — |
| 3 months | −14.4% | −0.5% | −13.9 pp | — |
| 6 months | +9.0% | +4.4% | +4.7 pp | — |
| Year to date | −5.0% | +12.3% | −17.3 pp | — |
| 1 year | +6.0% | +13.5% | −7.6 pp | −4.3% |
| 3 years | +18.6% | +76.4% | −57.8 pp | −0.4% |
| 5 years | −3.8% | +63.7% | −67.5 pp | — |
Price returns, dividends excluded.
Quarterly results
Latest quarter: Q3 2026 · 30 Sept 2026
Quarterly margins
Quarterly statements · USD
| Fiscal year | Q4 '24 | Q1 '25 | Q2 '25 | Q3 '25 | Q4 '25 | Q1 '26 | Q2 '26 | Q3 '26 |
|---|---|---|---|---|---|---|---|---|
| Revenue | 9.2 bn | 9.2 bn | 9.6 bn | 9.7 bn | 9.2 bn | 9.3 bn | 9.8 bn | 9.9 bn |
| Cost of revenue | 7.8 bn | 7.8 bn | 8.1 bn | 8.2 bn | 7.8 bn | 7.8 bn | 8.3 bn | 8.5 bn |
| Gross profit | 1.4 bn | 1.4 bn | 1.5 bn | 1.5 bn | 1.4 bn | 1.4 bn | 1.5 bn | 1.5 bn |
| SG&A | 902.2 m | 952.7 m | 1.0 bn | 998.0 m | 979.4 m | 1.0 bn | 1.0 bn | 1.0 bn |
| Operating income | 411.6 m | 406.3 m | 425.3 m | 421.6 m | 341.4 m | 335.8 m | 448.3 m | 420.2 m |
| Depreciation & amortisation | 75.6 m | 77.7 m | 65.2 m | 65.5 m | 84.1 m | 86.3 m | 70.9 m | 71.6 m |
| Interest expense | 68.5 m | 65.5 m | 66.7 m | 68.3 m | 75.0 m | 70.3 m | 62.7 m | 63.1 m |
| Pre-tax income | 282.2 m | 284.5 m | 352.1 m | 282.2 m | 189.5 m | 142.0 m | 352.1 m | 391.0 m |
| Income tax | 68.5 m | 73.3 m | 93.9 m | 63.6 m | 51.6 m | 40.0 m | 90.5 m | 98.1 m |
| Net income | 212.7 m | 209.5 m | 256.1 m | 217.1 m | 136.9 m | 100.4 m | 260.0 m | 291.1 m |
| Diluted EPS | 7.94 ≈ | 7.94 | 9.87 | 8.61 | 5.65 ≈ | 4.28 | 11.54 | 13.22 |
| Operating cash flow | 61.8 m | 322.1 m | 9.3 m ≈ | -98.4 m ≈ | 123.7 m | -108.4 m | -65.7 m ≈ | -30.8 m ≈ |
| Capex | 79.5 m | 68.7 m | 80.1 m ≈ | 108.9 m ≈ | 93.2 m | 97.1 m | 56.3 m ≈ | 98.9 m ≈ |
| Dividends paid | 14.1 m | 13.9 m | 14.3 m ≈ | 13.9 m ≈ | 13.2 m | 12.8 m | 12.9 m ≈ | 15.4 m ≈ |
| Share repurchases | 92.7 m | 143.4 m | 119.9 m ≈ | 399.0 m ≈ | 298.6 m | 297.0 m | 237.0 m ≈ | 90.5 m ≈ |
≈ derived quarter (cumulative difference / share-days average)
E/P over time
E/P = trailing-12-month diluted EPS / price at quarter end. E/P is the inverse of P/E and stays defined when earnings are negative.
Today's P/E sits at the 43 percentile of its own 40-quarter history (min 4.6, median 9.4, max 16.9; quarters with earnings only).
Fiscal years
| Fiscal year | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|---|---|---|
| Revenue | 11.8 bn | 12.7 bn | 13.1 bn | 22.8 bn | 28.2 bn | 31.0 bn | 36.2 bn | 37.6 bn |
| Revenue YoY | +17.2% | +7.2% | +3.6% | +73.9% | +23.5% | +10.1% | +16.6% | +4.0% |
| Net income | 265.7 m | 271.5 m | 470.3 m | 1.1 bn | 1.3 bn | 1.0 bn | 796.7 m | 819.6 m |
| Net income YoY | +8.4% | +2.2% | +73.2% | +125.4% | +18.0% | −20.0% | −20.4% | +2.9% |
| Diluted EPS | 10.86 | 11.60 | 19.53 | 36.54 | 44.17 | 36.29 | 29.45 | 32.32 |
| Diluted EPS YoY | +11.4% | +6.8% | +68.4% | +87.1% | +20.9% | −17.8% | −18.8% | +9.7% |
| net % | 2.2% | 2.1% | 3.6% | 4.6% | 4.4% | 3.2% | 2.2% | 2.2% |
| Free cash flow | 361.7 m | 399.6 m | 376.8 m | 1.5 bn | -913.2 m | -702.6 m | 73.7 m | 5.8 m |
Reported results vs expectations
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Balance sheet & financial health
Fiscal year 2025 · 31 Dec 2025
- Cash
- 391.3 m USD
- Financial debt
- 133.9 m USD
- Net debt
- -257.4 m USD
- Equity
- 6.6 bn USD
- Total assets
- 25.1 bn USD
- Debt / equity
- 0.02x
- Current ratio
- 1.17x
- ROE
- 12.3%
- ROA
- 3.4%
- FCF margin
- 0.0%
Financial statements (source on every figure)
Revenue and net income (USD)
Margins
Income statement · USD
| Line | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | Source (latest year) |
|---|---|---|---|---|---|---|---|
| Revenue | 13.1 bn | 22.8 bn | 28.2 bn | 31.0 bn | 36.2 bn | 37.6 bn | SEC (XBRL)· 25 Feb 2026verified |
| Cost of revenue | 10.9 bn | 18.6 bn | 23.0 bn | 25.8 bn | 30.6 bn | 31.9 bn | SEC (XBRL)· 25 Feb 2026verified |
| Gross profit | 2.2 bn | 4.3 bn | 5.2 bn | 5.2 bn | 5.6 bn | 5.7 bn | SEC (XBRL)· 25 Feb 2026verified |
| SG&A | 1.4 bn | 2.5 bn | 3.0 bn | 3.3 bn | 3.8 bn | 3.9 bn | SEC (XBRL)· 25 Feb 2026verified |
| Operating income | 692.7 m | 1.7 bn | 1.9 bn | 1.7 bn | 1.6 bn | 1.6 bn | SEC (XBRL)· 25 Feb 2026verified |
| Depreciation & amortisation | 92.4 m | 127.3 m | 172.7 m | 204.1 m | 295.3 m | 323.6 m | SEC (XBRL)· 25 Feb 2026verified |
| EBITDA | 785.1 m ≈ | 1.8 bn ≈ | 2.1 bn ≈ | 1.9 bn ≈ | 1.9 bn ≈ | 1.9 bn ≈ | SEC (XBRL)· 25 Feb 2026derived |
| Interest expense | 71.6 m | 103.4 m | 129.1 m | 201.2 m | 257.8 m | 275.5 m | SEC (XBRL)· 25 Feb 2026verified |
| Pre-tax income | 648.5 m | 1.5 bn | 1.7 bn | 1.4 bn | 1.1 bn | 1.1 bn | SEC (XBRL)· 25 Feb 2026verified |
| Income tax | 178.2 m | 422.1 m | 468.4 m | 350.6 m | 255.0 m | 282.5 m | SEC (XBRL)· 25 Feb 2026verified |
| Net income | 470.3 m | 1.1 bn | 1.3 bn | 1.0 bn | 796.7 m | 819.6 m | SEC (XBRL)· 25 Feb 2026verified |
| Diluted EPS | 19.53 | 36.54 | 44.17 | 36.29 | 29.45 | 32.32 | SEC (XBRL)· 25 Feb 2026verified |
| Weighted average diluted shares | 24.1 m | 29.0 m | 28.3 m | 27.6 m | 27.1 m | 25.4 m | SEC (XBRL)· 25 Feb 2026verified |
| Dividend per share | 1.22 | 1.36 | 1.61 | 1.92 | 2.09 | 2.18 | SEC (XBRL)· 25 Feb 2026verified |
≈ computed by olivLaw from the reported lines of the same year: Operating income + Depreciation & amortisation.
Balance sheet · USD
| Line | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | Source (latest year) |
|---|---|---|---|---|---|---|---|
| Cash | 160.2 m | 153.0 m | 271.5 m | 972.0 m | 445.8 m | 391.3 m | SEC (XBRL)· 25 Feb 2026verified |
| Receivables | 614.0 m | 685.5 m | 813.1 m | 1.1 bn | 1.2 bn | 1.1 bn | SEC (XBRL)· 25 Feb 2026verified |
| Inventories | 2.5 bn | 2.4 bn | 3.4 bn | 4.8 bn | 5.9 bn | 6.1 bn | SEC (XBRL)· 25 Feb 2026verified |
| Current assets | 3.3 bn | 3.3 bn | 4.6 bn | 6.9 bn | 7.8 bn | 7.9 bn | SEC (XBRL)· 25 Feb 2026verified |
| Property, plant & equipment, net | 2.2 bn | — | — | — | — | — | SEC (XBRL)· 29 Apr 2021verified |
| Goodwill | 593.0 m | 977.3 m | 1.5 bn | 1.9 bn | 2.1 bn | 2.5 bn | SEC (XBRL)· 25 Feb 2026verified |
| Total assets | 7.9 bn | 11.1 bn | 15.0 bn | 19.6 bn | 23.1 bn | 25.1 bn | SEC (XBRL)· 25 Feb 2026verified |
| Accounts payable | 158.2 m | 235.4 m | 258.4 m | 288.0 m | 333.7 m | 339.5 m | SEC (XBRL)· 25 Feb 2026verified |
| Short-term debt | 66.0 m | 223.7 m | 20.5 m | 109.6 m | 192.1 m | 133.9 m | SEC (XBRL)· 25 Feb 2026verified |
| Long-term debt | 2.1 bn | 2.4 bn | — | — | — | — | SEC (XBRL)· 18 Feb 2022verified |
| Current liabilities | 2.5 bn | 2.4 bn | 3.2 bn | 4.9 bn | 6.6 bn | 6.7 bn | SEC (XBRL)· 25 Feb 2026verified |
| Total liabilities | 5.2 bn | 6.5 bn | 9.8 bn | 13.3 bn | 16.4 bn | 18.5 bn | SEC (XBRL)· 25 Feb 2026verified |
| Equity | 2.7 bn | 4.6 bn | 5.2 bn | 6.2 bn | 6.7 bn | 6.6 bn | SEC (XBRL)· 25 Feb 2026verified |
Cash flow · USD
| Line | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | Source (latest year) |
|---|---|---|---|---|---|---|---|
| Operating cash flow | 544.6 m | 1.8 bn | -610.1 m | -472.4 m | 425.1 m | 356.7 m | SEC (XBRL)· 25 Feb 2026verified |
| Capex | 167.8 m | 260.4 m | 303.1 m | 230.2 m | 351.4 m | 350.9 m | SEC (XBRL)· 25 Feb 2026verified |
| Free cash flow | 376.8 m ≈ | 1.5 bn ≈ | -913.2 m ≈ | -702.6 m ≈ | 73.7 m ≈ | 5.8 m ≈ | SEC (XBRL)· 25 Feb 2026derived |
| Investing cash flow | -1.6 bn | -2.9 bn | -1.3 bn | -1.3 bn | -1.9 bn | -1.0 bn | SEC (XBRL)· 25 Feb 2026verified |
| Financing cash flow | 1.1 bn | 1.1 bn | 2.0 bn | 2.4 bn | 907.6 m | 612.1 m | SEC (XBRL)· 25 Feb 2026verified |
| Dividends paid | 29.1 m | 38.8 m | 45.2 m | 52.8 m | 56.5 m | 55.3 m | SEC (XBRL)· 25 Feb 2026verified |
| Share repurchases | 50.6 m | 230.7 m | 688.3 m | 48.9 m | 365.9 m | 960.9 m | SEC (XBRL)· 25 Feb 2026verified |
≈ computed by olivLaw from the reported lines of the same year: Operating cash flow − Capex.
Computed indicators
Growth
Profitability
Returns
Balance sheet
Liquidity
Cash
Efficiency
Market and valuation
1 indicators that do not apply to the sector.
Valuation
olivLaw classification
Score: 43 / 100
A scoring methodology on indicators and valuation, not investment advice.
Closing price
04 Nov 2026Source: olivLaw, closing series
Market cap: 6.8 bn USD
Key indicators
Coverage and freshness
Score by group
- Valuation37
- Returns100
- Quality24
- Balance sheet45
- Growth42
Estimated value range
The combined range = the median of the valid methods' low, central and high values; it is not a probability interval and does not cover every result. Envelope of all methods: 331.47 – 760.54 USD.
Methods computed but outside the aggregate range: Dividend discount (DDM) (a small share of earnings is paid as dividends (capital returns through buybacks): the dividend model does not describe the value and stays outside the aggregate).
Valuation assumptions are editorial choices, not measured; beta is not measured.
Method ranges (USD per share)
— — Mid · ▏ Price
Valuation methods
- DCF (discounted cash flow)unavailable · net debt missing: EV cannot be bridged to equity (missing debt is not zero)
- Peers: EV/EBITDAunavailable · net debt missing: EV cannot be bridged to equity (missing debt is not zero)
- Peers: P/E331.47 – 760.54 (Mid 488.63)11 companies used · median multiple 14.1x · quartiles 9.6x – 21.9xABG, AN, CASY, CPRT, GPI, KMX, MUSA, OPLN, PAG, RUSHA, SAH
- Dividend discount (DDM)outside the aggregate28.65 – 38.53 (Mid 32.86)a small share of earnings is paid as dividends (capital returns through buybacks): the dividend model does not describe the value and stays outside the aggregate
Classification (SIC) comparables group by industry code, not by economic activity; the direct group is an editorial selection by activity. Members' multiples are on their own trailing twelve months, at their own latest close.
Assumptions (illustrative, editorial)
- Risk-free rate
- 4.3%
- Equity risk premium
- 5.0%
- Beta (default)
- 1.00
- Cost of equity
- 9.3%
- Terminal growth
- 2.5%
Factor scorecard
Neutral profile · Score 43/100
| Factor | Value | Score | Weight used |
|---|---|---|---|
| ROIC · Quality | unavailable | unavailable | — |
| Net margin · Quality | 2.1% | 47 (vs peers) | 10% |
| FCF conversion · Quality | -54.1% | 0 (on a fixed band) | 10% |
| Revenue CAGR 3Y · Growth | 10.1% | 84 (on a fixed band) | 13% |
| EPS CAGR 3Y · Growth | -9.9% | 0 (on a fixed band) | 13% |
| Net debt / EBITDA · Balance sheet | unavailable | unavailable | — |
| Interest coverage · Balance sheet | 5.7x | 65 (on a fixed band) | 10% |
| Current ratio · Balance sheet | 1.0x | 17 (on a fixed band) | 6% |
| P/E (TTM) · Valuation | 9.1x | 67 (vs peers) | 16% |
| EV/EBITDA · Valuation | unavailable | unavailable | — |
| FCF yield · Valuation | -6.3% | 0 (on a fixed band) | 13% |
| Shareholder yield (distributions) · Returns | 14.3% | 100 (on a fixed band) | 10% |
| Payout ratio (FCF) · Returns | unavailable | unavailable | — |
Factors without a value were dropped; the remaining weights were renormalised.
Score groups
- Balance sheet45/100 · 2/3 factors with a value
- Growth42/100 · 2/2 factors with a value
- Quality24/100 · 2/3 factors with a value
- Returns· partial100/100 · 1/2 factors with a value
- Valuation37/100 · 2/3 factors with a value
A «partial» group is computed from under half of its weight or from one factor: it is not a full assessment of the group.
Memo
Lithia Motors, Inc. (LAD). Latest full fiscal year: 2025; data up to 2026-09-30.
Figures computed from the financial statements: revenue 37.6 bn USD in 2025; YoY growth 4.0%; net margin 2.1%; ROE 11.8%.
The estimated value range is 331.47–760.54 USD per share (median of 1 methods, agreement: single method); assumptions are illustrative. Against the central value of 488.63 USD, the price of 315.64 USD leaves a potential of 54.8% (value / price − 1) and a margin of safety of 35.4% (1 − price / value). The range is the median of the methods' low, central and high values, not a probability interval.
olivLaw score 43/100, methodological classification: neutral profile (score, margin of safety and method agreement together; not a judgement of the right price). Groups assessed only in part: returns. Not investment advice.
Text generated deterministically from the figures shown; no language model. Not investment advice.
What supports the thesis
- Revenue CAGR 3Y: 10.1%
- Shareholder yield (distributions): 14.3%
- The price is below the estimated value range
What contradicts it
- FCF conversion: -54.1%
- EPS CAGR 3Y: -9.9%
- Current ratio: 1.0x
- FCF yield: -6.3%
Not assessed (insufficient data or a ratio without meaning): ROIC, Net debt / EBITDA, EV/EBITDA, Payout ratio (FCF).
Versus the vertical median
Retail-Auto Dealers & Gasoline Stations (SIC 5500) · same industry (4-digit SIC) · compared with 18 companies
Multiples and returns vs the median
Price rebased to 100 (monthly, 5 years)
Companies in the vertical
| Market cap | P/E | ROE | Net margin | Revenue YoY | 1A / 3A | |
|---|---|---|---|---|---|---|
| CPRTCopart, Inc. | 30.2 bn | 21.0 | 16.2% | 31.8% | +0.4% | −16% / −35% |
| CASYCasey’s General Stores, Inc. | 24.9 bn | 32.5 | 20.0% | 4.1% | +10.2% | +18% / +145% |
| PAGPenske Automotive Group, Inc. | 13.9 bn | 15.5 | 15.5% | 2.8% | −0.2% | +31% / +42% |
| MUSAMurphy USA Inc. | 9.1 bn | 14.1 | 99.0% | 2.9% | −4.2% | +30% / +36% |
| KMXCarmax, Inc. | 7.8 bn | 26.9 | 4.7% | 1.1% | −1.8% | +43% / −14% |
| LADLithia Motors, Inc. | 6.8 bn | 9.1 | 11.8% | 2.1% | +4.0% | +6% / +19% |
| ANAutonation, Inc. | 5.9 bn | 8.8 | 30.2% | 2.6% | +3.2% | −13% / +36% |
| OPLNOPENLANE, Inc. | 4.5 bn | 22.8 | 13.1% | 9.2% | +8.2% | +44% / +151% |
| ABGAsbury Automotive Group, Inc. | 3.8 bn | 8.3 | 11.8% | 2.7% | +4.7% | −10% / −0% |
| GPIGroup 1 Automotive, Inc | 3.3 bn | 8.6 | 12.4% | 1.7% | +13.2% | −32% / −3% |
| NXXTNextnrg, Inc. | 427.3 m | — | — | -61.3% | +194.7% | +108% / −43% |
| VRMVroom, Inc. | 36.5 m | — | -45.0% | — | −54.2% | −66% / unavailable |
| KXINKaixin Holdings | 12.2 m | — | -307.2% | -41,788.4% | unavailable | −96% / −100% |
| CRMTAmerica’s Car-Mart, Inc. | 10.5 m | — | -43.0% | -18.6% | −7.9% | −94% / −98% |
| JZXNJiuzi Holdings Inc. | 1.4 m | — | -90.7% | -353.5% | +105.9% | −86% / −100% |
| RUSHARush Enterprises, Inc. | — | 14.0 | 11.8% | 3.7% | −4.7% | +33% / +75% |
| CVNACarvana Co. | 0 | 0.0 | 51.5% | 6.2% | +48.6% | +4% / +1,138% |
| CWHCamping World Holdings, Inc. | 0 | — | -33.2% | -1.6% | +4.4% | −52% / −74% |
| SAHSonic Automotive, Inc. | — | 10.3 | 19.4% | 1.3% | +6.5% | +2% / +25% |
1- and 3-year price returns: for LAD from daily closes (the same as the performance table), for the other companies from month-end closes.
olivLaw engine forecast
The world engine ran after the company's latest material disclosure. Probabilities are of TOUCHING a level within the horizon (not closing there) and sit next to the random walk (p_rw), the no-information benchmark.
The engine has no published run for this company yet.
Valuation scenarios (editable assumptions)
Illustrative scenarios
Illustrative: not forecasts and without probabilities. Each case is one coherent set of assumptions, computed on today's figures.
Estimated price (USD)
| Estimated price | Bear | Base | Bull |
|---|---|---|---|
| 1 years | 207.16 Total return -34% · Per year -34% | 365.31 Total return 17% · Per year 17% | 548.98 Total return 75% · Per year 75% |
| 3 years | 224.38 Total return -27% · Per year -10% | 442.95 Total return 43% · Per year 13% | 727.47 Total return 134% · Per year 33% |
| 5 years | 243.04 Total return -19% · Per year -4% | 537.08 Total return 75% · Per year 12% | 963.99 Total return 212% · Per year 26% |
- Exit P/E± 110.74
- Net margin± 77.52
- Annual revenue growth± 60.38
- Annual dilution± 6.51
AI analysis
AI-generatedAI-generated analysis (Claude) from cited public sources; it may contain errors. Not investment advice. As of 27 Oct 2026 · Model: claude-haiku-5-5.
Possibly outdated: the newest document it read is from 21 Oct 2026; since then the company filed 10-Q (28 Oct 2026).
In brief
Lithia & Driveway (LAD) is the largest global automotive retailer, combining showroom sales, online platforms, captive finance and aftersales service in one model. It has grown through acquisitions and matters now because new vehicle margins are normalizing while service and finance make up a growing share of profit.12
SWOT
Strengths
- A large, diversified network of locations and brands that reduces dependence on any single manufacturer.
- Aftersales and finance income contribute significantly to profitability and are more stable in difficult economic periods.
- Proprietary digital platforms and customer data managed in-house that support omnichannel sales.
Weaknesses
- Reliance on new vehicle sales, where margins have fallen as pricing normalizes.
- SG&A as a share of gross profit has risen, which pressures the control of profitability.
- Activity is sensitive to customer access to credit and to the level of interest rates.
Opportunities
- Acquiring new stores in regions where target returns are achievable, if valuations remain reasonable.
- Expanding the Driveway and GreenCars platforms and captive finance into new markets.
- A growing older vehicle fleet that could sustain demand for service and repairs.
Threats
- Falling demand if consumer confidence or credit conditions weaken.
- Financial or quality problems at manufacturers that could disrupt vehicle supply.
- Competition from online platforms, subscription models and new electric vehicle makers.
Risks
- Cyclical vehicle saleshigh
Vehicle sales are sensitive to economic cycles and consumer confidence. A drop in spending could weigh on revenue and margins.1
- Dependence on manufacturershigh
A significant share of new vehicle sales comes from a few manufacturers. Financial, quality or delivery problems at those makers could reduce supply and sales.1
- Access to vehicle financingmedium
If customer financing becomes more expensive or restrictive, vehicle purchases could decline, including through the company's own finance channel.1
- Competition and new sales modelsmedium
Online platforms and subscription models could reduce the share of traditional dealerships if the company's digital investments fall short.1
- Debt and financial covenantslow
The company carries debt and must meet covenants in its credit agreements. Interest rate changes or refinancing difficulties could reduce financial flexibility.2
Investment thesis
What would need to be true (bull case)
- If aftersales and finance keep growing faster than vehicle sales, profitability could stay solid even when vehicle margins are weaker.13
- Acquisitions and share repurchases could lift earnings per share, as seen in the third quarter of 2026.3
- The large network and digital platform could let the company gain share if omnichannel retail becomes the norm.1
What would break the thesis
- If new vehicle margins keep falling, profit could come in weaker than expected, especially if operating costs rise.1
- If interest rates stay high, vehicle affordability could fall and demand could weaken.1
- Competition from online platforms and new manufacturers could erode the share of the physical network.1
What to watch
- Trend in new and used vehicle gross marginsQ4 2026
- Pace of store acquisitions and divestitures against the return target2027
- Financing Operations income and penetration rateQ1 2027
- Updates on share repurchases and dividendsnext 10-K
Products, market & competition
AI-generatedAI-generated analysis (Claude) from cited public sources; it may contain errors. Not investment advice. As of 27 Oct 2026 · Model: claude-haiku-5-5.
Possibly outdated: the newest document it read is from 21 Oct 2026; since then the company filed 10-Q (28 Oct 2026).
The business
Lithia & Driveway runs new and used vehicle dealerships, maintenance and repair services, financing and insurance, plus the Driveway.com online platform and the GreenCars brand. At December 31, 2025 it operated 455 locations with 54 brands across the United States, the United Kingdom and Canada, and at June 30, 2026 it had 467 locations and 59 brands.12 The company employs about 30,000 full-time equivalents and was founded in 1946.1
Strategy combines franchise acquisitions, especially in regional and metropolitan markets, with selective divestitures to optimize the network. The company targets an after-tax return above 15% on acquisitions and has averaged over 25% by the third year of ownership.1 Free cash flow is allocated to acquisitions, capital expenditure and innovation, and the remainder to dividends and share repurchases.1
Capital allocation includes buybacks and dividends. In the third quarter of 2026 the company repurchased 85 million dollars of shares and announced a 7% increase in its quarterly dividend.3
Segments
Vehicle Operations
Vehicle Operations covers new and used vehicle sales, the finance and insurance products tied to them, and aftersales service. Total revenues reached 37.6 billion dollars in fiscal 2025, up 4% from 2024.1
Financing Operations
Financing Operations provides captive financing for customers buying vehicles from the network, and includes the fleet division in the United Kingdom. The company targets earnings of at least three times the net finance income from third-party lenders.1 In the third quarter of 2026 segment income rose 69% year over year.3
Aftersales
Aftersales is described as the largest contributor to overall profitability and as more resilient in downturns. In fiscal 2025 aftersales gross profit rose 10.4% and the gross margin reached 57.7%.1
Market context
The US auto market is described as mature and unconsolidated, with new vehicle sales that may not grow in coming years. New vehicle margins are returning toward pre-pandemic levels, and service and finance revenue are becoming more important.1
Demand depends on economic cycles, consumer confidence and access to credit. High interest rates and higher vehicle prices have hurt affordability, and UK rules on petrol-only engine sales are reshaping the vehicle mix.1
Trends
- Normalizing new vehicle marginsheadwind
Gross profit per new vehicle fell in 2025 as the company says margins are returning toward pre-pandemic levels. Pressure on per-unit profit could continue if prices stabilize.1
- Growing aftersales businesstailwind
An older vehicle fleet and a growing number of vehicles in operation support demand for repairs and maintenance. Aftersales is seen as an increasingly important part of profit.1
- Electric vehicles and emissions rulesmixed
Emissions rules and zero-emission targets could change vehicle sales and service revenue, because electric vehicles need less maintenance. The effect could be positive or negative.1
- Acquisition growth and the online channeltailwind
Acquisitions have added annualized revenue, and the Driveway platform widens the geographic reach of sales. The company says cost per delivery fell, which supports profitability if the trend holds.13
Competitive position
Competition includes many public and private dealership groups, online retailers operating without a physical network, and new electric vehicle makers. The company has no purchasing cost advantage over manufacturers, which could reduce margins.1
Finance and insurance firms, banks and manufacturer captive lenders compete in the F&I segment, which earns higher margins than vehicle sales. Subscription models and omnichannel retail could draw customers away from the traditional channel.1
- AutoNationAN
Auto retailer in the same sales and service market, named as a competitor in the company's sector description.
- Penske Automotive GroupPAG
Dealership group competing in new vehicles, used vehicles and services across the same general market.
- Sonic AutomotiveSAH
Dealership network operating in the same retail auto and financing market.
- Online auto retail platforms and new electric vehicle makers
Competitors named in the company's risk factors that could attract customers with digital sales or subscription models.
Links, dependencies and risks
Who the company is tied to, from its own SEC filings (customers, suppliers, production, partners, competitors, countries, regulation), from the 5 %+ holders' statements (13D/13G) and from what other companies say about it. Click a node for its evidence; on a listed company the graph moves to it.
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News & filings
In the press
No news in our archive over the last 180 days.
SEC filings
- Quarterly report28 Oct 2026
- Current report21 Oct 2026Results of operations · Other events · Financial statements and exhibits
- Current report25 Sept 2026Departure or appointment of officers · Financial statements and exhibits
- Quarterly report29 Jul 2026
- Current report29 Jul 2026Results of operations · Other events · Financial statements and exhibits
- Current report01 May 2026Shareholder vote · Financial statements and exhibits
- Quarterly report29 Apr 2026
- Current report29 Apr 2026Results of operations · Other events · Financial statements and exhibits
- Proxy statement11 Mar 2026
- Current report04 Mar 2026Material agreement · Financial statements and exhibits
Sources
- [1] Form 10-K, fiscal year ended 2025-12-31 · SEC / Lithia & Driveway (LAD) · 25 Feb 2026
- [2] Form 10-Q, quarter ended 2026-06-30 · SEC / Lithia & Driveway (LAD) · 29 Jul 2026
- [3] Form 8-K, results release (exhibit 99.1) · SEC / Lithia & Driveway (LAD) · 21 Oct 2026
Figures computed by olivLaw from SEC filings and closing prices; the qualitative analysis is AI-generated from cited sources. Not investment advice.