Lithia Motors (LAD): Valuation Check After New Acquisitions, Buybacks and Upgraded Analyst Outlook

Lithia Motors (LAD) just doubled down on its growth and capital return playbook by combining fresh dealership acquisitions with sizeable share buybacks that underline management’s confidence in cash generation and long term earnings power.

See our latest analysis for Lithia Motors.

Even with this steady stream of acquisitions and buybacks in 2025, the share price at $317.70 is still working off a softer patch, with a 1 year total shareholder return of negative 16.3 percent but a much stronger 3 year total shareholder return of about 45.9 percent. This suggests that long term momentum is intact even as sentiment cools in the near term.

If Lithia’s mix of consolidation and capital returns has your attention, it could be worth seeing which other auto retailers and auto manufacturers are gaining traction with investors.

With the stock trading at a notable discount to analyst targets despite steady revenue and earnings growth, the key question now is whether Lithia is quietly undervalued or whether the market is already pricing in its next leg of expansion.

Most Popular Narrative: 18.6% Undervalued

With Lithia Motors’ fair value estimate sitting notably above the latest close of $317.70, the dominant narrative leans toward mispriced earnings power and underappreciated cash generation.

Advancements in captive finance operations (DFC) are expanding profitability, penetration, and resilience, with significant runway to scale; this segment is expected to contribute meaningfully to earnings and further diversify revenue streams, supporting EPS and free cash flow growth beyond what the market currently prices in.

Read the complete narrative.

Want to see how steady revenue growth, rising margins, and shrinking share count combine into this valuation view? The narrative stitches together a multi year earnings arc, a disciplined acquisition roll up, and a richer profit mix into one bold fair value call. Curious which assumptions really move the needle on that upside potential? Dive in to see how each lever reshapes Lithia’s long term earnings power.

Result: Fair Value of $390.13 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, sustained margin pressure from high SG&A costs and underwhelming same store sales could quickly challenge upbeat assumptions about long term earnings resilience.

Find out about the key risks to this Lithia Motors narrative.

Build Your Own Lithia Motors Narrative

If you see the story differently or want to stress test the numbers yourself, you can quickly build a personalized view in just a few minutes: Do it your way.

A great starting point for your Lithia Motors research is our analysis highlighting 5 key rewards and 1 important warning sign that could impact your investment decision.

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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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