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Bull -
- Growth in miles driven increases the wear and tear on vehicles, requiring more maintenance and repair work to keep them on the road, benefiting LKQ.
- LKQ’s collision business could see rising demand from increasing auto claims as more drivers return to the road following the COVID-19 pandemic.
- Increasing adoption of hybrid vehicles presents new revenue opportunities for LKQ, such as new battery-related parts, in addition to its ICE-related parts.
Bear
- Increasing adoption of ADAS technology could lead to a reduction in the number of auto accidents, pressuring LKQ’s collision business.
- The company’s 1 LKQ Europe initiative could face challenges in rationalizing its product portfolio and improving its procurement systems.
- Bottlenecks in the ocean freight industry could extend the average time it takes for LKQ’s imported aftermarket parts to reach its operating regions, making it difficult for the firm to maintain its high order fulfillment rates.
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Disclaimer
The user julio holds no position in NasdaqGS:LKQ. Simply Wall St has no position in any of the companies mentioned. The author of this narrative is not affiliated with, nor authorised by Simply Wall St as a sub-authorised representative. This narrative is general in nature and explores scenarios and estimates created by the author. The narrative does not reflect the opinions of Simply Wall St, and the views expressed are the opinion of the author alone, acting on their own behalf. These scenarios are not indicative of the company's future performance and are exploratory in the ideas they cover. The fair value estimates are estimations only, and does not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that the author's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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28.4% undervalued intrinsic discount1.83%
Revenue growth p.a.
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