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Lithia Motors Expands in West Virginia by Adding New Stores

Zacks Equity Research

Lithia Motors, Inc. LAD) has announced the addition of Chrysler Dodge Jeep Ram Fiat and Subaru stores in Morgantown, WV. Previously, the company acquired Ford Lincoln of Morgantown as part of its nationwide network reaching 82% of the United States. With rapid growth of the market for purchasing dealership, Lithia Motors continuously strives to make acquisitions for increasing its market share and catering to customer requirements in a better way.

The addition of FCA brands and Subaru means that customers will get more domestic and import selection. It also strengthens Lithia Motors’ network.

It is anticipated that the new Morgantown locations will generate around $100 million in annual revenues. Per the company, the stores demonstrate its strategy of acquiring strong stores that are not performing to their potential.

By acquiring and building strong brands with considerable earnings potential, Lithia Motors generates significant cash flows while maintaining low leverage. Notably, the company generates around $250 million of free cash flow annually.

Apart from acquiring more stores, Lithia Motors is activating sell-from-home technology with vehicle pickup to extend its network’s reach.

Additionally, the company is widening omni-channel capabilities to expand and modernize transportation solutions for customers

Lithia Motors’ investor-friendly moves, including dividend payouts and share buybacks, lift investors’ confidence, as is evident from its share price movement. Over the past year, its shares have outperformed the industry it belongs to. Over this period, shares of the Zacks Rank #2 (Buy) company have gained 64% compared with the industry’s growth of 23%.

Other Stocks to Consider

Some other top-ranked stocks in the Auto-Tires-Trucks sector are BRP Inc DOOO and Sonic Automotive, Inc SAH, currently sporting a Zacks Rank #1 (Strong Buy), and Asbury Automotive Group, Inc ABG, carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

BRP has an expected earnings growth rate of 17.2% for 2019. The company’s shares have gained 48.7% year to date.

Sonic Automotive has an estimated earnings growth rate of 6.2% for 2019. Its shares have gained 32.2% year to date.

Asbury Automotive has an estimated earnings growth rate of 10.7% for 2019. Its shares have gained 45.8% year to date.

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Lithia Motors, Inc. (LAD) : Free Stock Analysis Report
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