Lithia Motors, Inc. (NYSE:LAD) Just Released Its Third-Quarter Earnings: Here's What Analysts Think

Investors in Lithia Motors, Inc. (NYSE:LAD) had a good week, as its shares rose 4.1% to close at US$322 following the release of its third-quarter results. Lithia Motors reported in line with analyst predictions, delivering revenues of US$9.7b and statutory earnings per share of US$8.61, suggesting the business is executing well and in line with its plan. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

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Taking into account the latest results, the current consensus from Lithia Motors' twelve analysts is for revenues of US$39.4b in 2026. This would reflect a reasonable 4.7% increase on its revenue over the past 12 months. Per-share earnings are expected to accumulate 2.8% to US$37.69. Before this earnings report, the analysts had been forecasting revenues of US$39.2b and earnings per share (EPS) of US$37.19 in 2026. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

View our latest analysis for Lithia Motors

There were no changes to revenue or earnings estimates or the price target of US$389, suggesting that the company has met expectations in its recent result. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Lithia Motors at US$465 per share, while the most bearish prices it at US$310. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Lithia Motors' revenue growth will slow down substantially, with revenues to the end of 2026 expected to display 3.8% growth on an annualised basis. This is compared to a historical growth rate of 18% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.1% per year. Factoring in the forecast slowdown in growth, it seems obvious that Lithia Motors is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$389, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Lithia Motors. Long-term earnings power is much more important than next year's profits. We have forecasts for Lithia Motors going out to 2027, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 1 warning sign with Lithia Motors , and understanding it should be part of your investment process.

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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.