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Auto Dealers Are Wednesday Winners: CarMax, GM Flirt With Buys

Lithia Motors (LAD) preannounced strong second-quarter earnings and revenue Wednesday, lifting a slew of fellow auto dealers and pushing larger peer CarMax (KMX) and automaker General Motors (GM) closer to buy points.

Lithia sees adjusted Q2 earnings of $2.20 to $2.26 per diluted share. On the low end, that would represent 12.2% year-over-year growth and would be in line with Zacks' consensus estimates for EPS of $2.20 in Q2.

Q2 revenue should be $2.4 billion to $2.5 billion. On the low end, that would be a 14% jump from a year ago. Analysts had expected. $2.406 billion.

Shares of Lithia Motors spiked 9.1% to 99.21, rising intraday to 104.20. trade. Peers CarMax, AutoNation (AN), Group 1 Automotive (GPI) and Penske Automotive Group (PAG) revved up in tandem on the stock market today by 0.85%, 1.4%, 1.7% and 1.1%, respectively. CarMax shares sit 3% under a 65.90 buy point after moving to 65.30 in the morning.

General Motors rose 35.90 early, nearing a 36.10 buy point, but pulled back to a gain of 0.3% at 35.50. Fiat Chrysler (FCAU) dipped 7 cents to 11.47, hovering below an 11.75 buy point. Ferrari (RACE) sped ahead 2.5% to 92.88, a record high and clearing a 92.04 buy point.

The U.S. auto industry saw a sixth straight month of flat to falling vehicle sales in June.

Used-Car Sales

Lithia said used-vehicle retail same-store sales increased 3.8% to 4.1% in the June quarter vs. a fractional gain for new-vehicle retail same-store sales.  In May, the company had described the used-vehicle market as its largest future opportunity and roughly 2.3 times the size of the new-vehicle market.

Lithia Motors did not give any clues about vehicle pricing. CarMax last month reported strong results, but said used-vehicle price declines accelerated even with more-expensive SUVs and pickups making more of the sales mix.

Lithia, which acquired DCH Auto Group in 2014 and partnered with Carbone Auto Group last year, also said Wednesday it sees opportunity in that market.

"The acquisition market remains active, and we believe this is an opportune time to access additional capital for growth," said Bryan DeBoer, Lithia president and CEO. "We seek greenfield-like returns on our acquisition targets and anticipate further activity in the near future."

Lithia will release full results on July 28.

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