Consumer Cyclical · Auto & Truck Dealerships · NYSE · United States
$295.57+1.55%
Market cap $6.4BNext earnings 2026-10-21Updated Oct 24, 2026
Our verdict
Trades 54% below our fair value
Price
$295.57
Model fair valueConfidence: medium
$647
Only one of our models could value this stock with confidence, so use it as a guide.
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Valued as a growth company: Discounted cash flow, P/E comparison, and EV/EBITDA comparison.
ACCE opinionLithia Motors Inc. Common Stock (LAD)
Fair value (2 models)
Not available
ACCE price target
$311
Rating
Not rated
Horizon
12 months
ACCE price target published on 10 Oct 2026, 00:00 CEST.
Price used: $296 at the close on 23 Oct 2026, 22:00 CEST.
Models: Discounted cash flow, EV/EBITDA comparison, and P/E comparison.
Fair value: the average of the applicable valuation models (discounted cash flow, multiples, residual income, dividend discount, shareholder yield), each run on the latest financial statements and the market price shown. Opinion columns (fair value, target, rating) are shown apart from the data. Full methodology: acceinvestments.com/data/how-we-value-stocks
Conflicts of interest: The author holds no personal position in this security. General statement
Produced by ACCE Investments (acceinvestments.com)
Data
ACCE score
51
out of 100
Analysts
67% buy
15 covering
P/E
8.4x
forward 7.9x
1-year return
-9.0%
Dividend yield
0.95%
Lithia Motors Inc. Common Stock in four questions
Plain answers, details below
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Overview
ACCE thesis
Lithia Motors runs one of the largest US franchised auto dealership networks, selling new and used vehicles across dozens of brands and earning most of its profit from parts, service and finance and insurance rather than from car sales themselves. The structural appeal is that after-sales work is recurring and less cyclical than vehicle volume, and Lithia has been building that base through its digital retail and financing arms. Growth is currently thin at 2.2% revenue growth, so the case rests on margin repair and capital allocation rather than top-line momentum. At a 9.8 trailing P/E and 7.9 forward P/E, with a 10.7% ROE and a 4.6% operating margin, the stock is priced for a cyclical dealer, which makes it worth a closer look if you believe service mix and buybacks can lift returns. The 52/100 score and the absence of index membership suggest the market is not yet paying for that repair, so the work is in testing whether margins can recover from here.
⚠ Investor warnings · 3 flagsAI-assisted·How I use AI
high
Thin free cash flow
FCF is only $6M against a $6.5B market cap, and debt/equity is 2.22. Earnings growth of 16.9% is not yet showing up as cash the balance sheet can use.
moderate
Elevated short interest
Short interest sits at 13.8% of float. That is a meaningful bet against the stock, and position sizing should reflect the chance of sharp moves in either direction.
moderate
Thin operating margin
Operating margin is 4.6% and net margin 1.9%, so there is little cushion if the auto retail cycle turns. Revenue growth of 2.2% year over year is also slow.
AI research notes
AI-assisted·How I use AIWritten Oct 18, 2026 · figures from 2026-06-30 · prices to Oct 23, 2026
Why it could do well
Analysts rate the stock Buy or Strong Buy, with 10 of 15 covering it, and their mean price target sits well above today's price.
Lithia beat earnings expectations last quarter, reporting $10.03 per share against $8.67 expected.
The company has cut its diluted share count by 6.3% in the last fiscal year, lifting each shareholder's slice of the business.
Why it could disappoint
Free cash flow over the last twelve months was only $6M, a thin cushion for a company carrying heavy debt.
Revenue grew just 2.2% year over year, far below the 23.5% average annual pace of the past five years.
Net margin of 1.9% and return on invested capital of 3.2% leave little profit from each dollar of sales or capital.
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Valuation
INVESTOR
Where LAD's valuation models land
Price
$295.57
Model fair valueConfidence: medium
$647
Model
Fair value
Upside
Discounted cash flow
EV/EBITDA comparison
P/E comparison
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Quality
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