LKQ (LKQ) Is Down 13.3% After Lowered 2025 Outlook and Negative Organic Sales Guidance - Has The Bull Case Changed?

• LKQ Corporation recently reported its second quarter 2025 results, highlighting sales of US$3.64 billion and net income of US$192 million, while also declaring a quarterly dividend and updating on its ongoing share repurchase program.
• Despite year-over-year improvements in net income, LKQ lowered its full-year guidance for both organic parts and services revenue growth and diluted EPS, projecting negative sales growth for the segment and a reduced earnings outlook for 2025.
• We'll examine how LKQ's revised full-year outlook, especially the expected revenue decline, now influences its investment narrative.

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LKQ Investment Narrative Recap

To be a shareholder in LKQ right now, you need to believe in the company’s ability to manage costs and maintain profitability, even as it faces renewed challenges to its top line. The recent downward revision in full-year organic parts and services sales growth and diluted EPS guidance makes near-term revenue momentum the most important catalyst, while the biggest risk is further deterioration in North American organic revenue, a threat now underscored by management’s updated outlook.

For many investors, the most relevant announcement this quarter is the revised earnings guidance. With LKQ now projecting negative organic growth for its key parts and services segment, the lowered revenue expectations and reduced diluted EPS targets suggest that headwinds, especially in North America, could weigh more heavily on results than previously anticipated.

But given this adjustment, investors should also be mindful of the risk that...

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

LKQ's outlook projects $15.1 billion in revenue and $999.7 million in earnings by 2028. This assumes a 2.2% annual revenue growth rate and a $298.7 million increase in earnings from the current $701.0 million.

Uncover how LKQ's forecasts yield a $52.53 fair value, a 63% upside to its current price.

Exploring Other Perspectives

Four Simply Wall St Community members estimate LKQ’s fair value between US$52.53 and US$64.66 per share, indicating wide valuation differences. This contrasts with management’s reduced outlook as revenue headwinds and profit risks remain in investor focus, explore the range of opinions further.

Explore 4 other fair value estimates on LKQ - why the stock might be worth over 2x more than the current price!

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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