Does LKQ (LKQ) See Sustained Value in Buybacks Despite Lowered Growth Outlook?

• LKQ Corporation recently reported its second quarter and six-month 2025 results, revealing lower sales but higher net income year-over-year, and affirmed a quarterly dividend of US$0.30 per share payable in late August.
• The company also lowered its full-year 2025 earnings and organic revenue growth guidance, while announcing further share repurchases and outlining expectations of lower performance for its core parts and services division compared to its previous outlook.
• With LKQ adopting a more cautious forecast for organic revenue growth and earnings in 2025, we’ll assess how this revised outlook affects the company’s long-term investment narrative.

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LKQ Investment Narrative Recap

To hold LKQ shares, an investor typically needs to believe in the long-term value of its cost-reduction initiatives, resilience of demand for aftermarket auto parts, and the potential for margin recovery as transformation efforts gain traction. The recent guidance cut, with lower expectations for 2025 organic revenue and earnings, directly impacts the company’s key near-term catalyst: delivering stabilized or rebounding organic revenue, especially in its core parts and services segment. This development amplifies the risk of further revenue stagnation, though the impact appears material only if weak trends persist. Of the recent announcements, the downward revision of 2025 earnings and organic revenue growth guidance is most relevant. As management now projects organic revenue declines between 1.5% and 3.5% and reduced earnings per share, the company’s cost-control and efficiency programs become even more critical. While share repurchases and dividend continuity provide some support, attention is shifting toward whether long-awaited improvements in Europe and North America can offset macro and sector headwinds. But on the other hand, investors should be aware that in periods of sustained revenue contraction, the pressure on margins and earnings can become a persistent challenge, especially if ...

Read the full narrative on LKQ (it's free!)

LKQ's narrative projects $14.9 billion revenue and $866.4 million earnings by 2028. This requires 2.0% yearly revenue growth and a $158.4 million earnings increase from $708.0 million today.

Uncover how LKQ's forecasts yield a $43.42 fair value, a 46% upside to its current price.

Exploring Other Perspectives

Three private investors from the Simply Wall St Community estimated LKQ’s fair value between US$43.42 and US$59.65 per share, with some viewing the stock as deeply undervalued. However, recent guidance pointing to organic revenue declines highlights how quickly consensus on future performance can shift. Explore what others think and how their views might change.

Explore 3 other fair value estimates on LKQ - why the stock might be worth just $43.42!

Build Your Own LKQ Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your LKQ research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.
• Our free LKQ research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate LKQ's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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