Lithia Motors (LAD) · Q2 2026 results and valuation

The projected cash flow doesn't cover the debt, so the price is far above the model's fair value.

1. Key theme

   I think that's the advantage of a new car retailer being top of funnel is it's Lithia Motors' easiest way…

   Source quote

   “And I think that's the advantage of a new car retailer being top of funnel is it's our easiest way... So that means our customer pay rates can grow and lose sight of the fact that if we can service our customers' car for 10 years rather than 3 to 5 years, we all win a lot more.”

2. Figure

   LAD delivered revenues of $9.8 billion and adjusted diluted EPS of $10.03, an increase of 9% from last year.

   Source quote

   “We delivered revenues of $9.8 billion and adjusted diluted EPS of $10.03, up 9% from last year as our leaders...”

3. Fading

   The company added over $27 billion in revenues over the last 6 years as customers who never sold value auto cars before begin to do more with less.

   Source quote

   “So there's a lot of opportunity of people that maybe have never sold value auto cars in the past. I mean we have added over $27 billion in revenues over the last 6 years. They've never really thought about doing more with less, and now they're really starting to hit their stride.”

Script and answers carried a similar tone, so the script's message held up under questioning.

Sentences that drove the tone

“Gross profit grew 3.1% on revenue growth of 1% with margins expanding 120 basis points year-over-year to 59.2% and customer paid gross profit growing 2.6% and warranty up 5.4%.”

“Our confidence is reinforced by this quarter's results all nicely coming together with sequential SG&A improvement, record DFC income, a used vehicle engine gaining momentum and strength in aftersales, all...”

“Our stores, especially in the sales departments, are gaining momentum in rebalancing their cost structures, improving the comp plans to reward profitable growth, aligning staff with throughput and consolidating roles...”