Wrapping up Q2 earnings, we look at the numbers and key takeaways for the vehicle retailer stocks, including Lithia (NYSE:LAD) and its peers.
Buying a vehicle is a big decision and usually the second-largest purchase behind a home for many people, so retailers that sell new and used cars try to offer selection, convenience, and customer service to shoppers. While there is online competition, especially for research and discovery, the vehicle sales market is still very fragmented and localized given the magnitude of the purchase and the logistical costs associated with moving cars over long distances. At the end of the day, a large swath of the population relies on cars to get from point A to point B, and vehicle sellers are acutely aware of this need.
The 4 vehicle retailer stocks we track reported a slower Q2. As a group, revenues missed analysts’ consensus estimates by 0.8%.
Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 due to cooling inflation. This year has been a different story as mixed inflation signals have led to market volatility, and vehicle retailer stocks have had a rough stretch. On average, share prices are down 6.1% since the latest earnings results.
Best Q2: Lithia (NYSE:LAD) With a strong presence in the Western US, Lithia Motors (NYSE:LAD) sells a wide range of vehicles, including new and used cars, trucks, SUVs, and luxury vehicles from various manufacturers.
Lithia reported revenues of $9.23 billion, up 13.8% year on year. This print was in line with analysts’ expectations, and overall, it was a strong quarter for the company with a decent beat of analysts’ earnings and gross margin estimates.
"In the second quarter, our teams focused on operating efficiency and continuity as we responded to the continued normalization of margins and the disruption created by the CDK cyberattack. Our teams demonstrated an impressive effort to quickly pivot and provide solutions to maintain our ability to stay operational across our network and support the restoration of our environment," said Bryan DeBoer, President and CEO.
Lithia achieved the fastest revenue growth of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 2.2% since reporting and currently trades at $270.
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CarMax (NYSE:NYSE:KMX) Known for its transparent, customer-centric approach and wide selection of vehicles, Carmax (NYSE:KMX) is the largest automotive retailer in the United States.
CarMax reported revenues of $7.11 billion, down 7.5% year on year, in line with analysts’ expectations. The business had a satisfactory quarter with a solid beat of analysts’ gross margin estimates.
The market seems content with the results as the stock is up 1.9% since reporting. It currently trades at $72.75.
Weakest Q2: America's Car-Mart (NASDAQ:CRMT) With a strong presence in the Southern and Central US, America’s Car-Mart (NASDAQ:CRMT) sells used cars to budget-conscious consumers.
America's Car-Mart reported revenues of $347.8 million, down 4.9% year on year, exceeding analysts’ expectations by 1.2%. Still, it was a softer quarter as it posted a miss of analysts’ gross margin and earnings estimates.
As expected, the stock is down 20.9% since the results and currently trades at $47.53.
Camping World (NYSE:NYSE:CWH) Founded in 1966 as a single recreational vehicle (RV) dealership, Camping World (NYSE:CWH) still sells RVs along with boats and general merchandise for outdoor activities.
Camping World reported revenues of $1.81 billion, down 5% year on year. This number missed analysts’ expectations by 3.1%. Overall, it was a softer quarter as it also produced a miss of analysts’ earnings estimates.
Camping World had the weakest performance against analyst estimates among its peers. The stock is down 3.1% since reporting and currently trades at $22.14.
This content was originally published on Stock Story
