* Note: Prices are in Million (M) USD.
Description:
Lithia Motors, Inc. is an automobile retailer in the United States. The company is headquartered in Medford, Oregon.
These criteria used Company's Cash, EBITDA and Debt balance to determines its fair value:
Cash : $404 M
Debt : $14,300 M
EBITDA : $2,338 M
Net Debt (Debt - Cash): $13,896 M
Since EBITDA cannot cover net debt within 3 years, Avoid This Stock.
This criteria used industry in which company operates:
Sector: Consumer cyclical
Industry: Auto & truck dealerships
Based on industry, 3 points assigned.
This criteria used Company's Price To Earning (P/E) Ratio to determines its fair value:
Forward PE Ratio: 8.99
Since Forward PE Ratio is less than 15, 5 points assigned.
This criteria used Company's ability to convert Sales into free cash flow to determine fair value:
Using last 20 overlapping fiscal years (max 20).Average Free Cash Flow: $29 M
Average Revenue: $10,598 M
Revenue Converted To Free Cash Flow (%): 0.3%
Since Free Cash Flow (FCF) to Revenue percentage is less than 15, 1 point assigned.
This criteria used company's growth potential to calculate its fair value:
Latest Revenue (2024-12-31): $36,188 M
Revenue 5 Years Ago (2019-12-31): $12,673 M
Total Growth over 5 Years: 185.6%
5-Year Revenue CAGR (Historical): 23.4%
Forward 5-Year CAGR (Tapered): 16.3%
Since historical Revenue CAGR is greater than 20, 5 points assigned.
This criteria used Company's ability to buy back its own share:
Latest Share Count (2024-12-31): $27 M
Share Count 5 Years Ago (2020-12-31): $24 M
Company is not buying back its own shares, 0 points assigned.
This criteria used Company's dividend payout ratio to determine its fair value:
Next Year Earnings Per Share (EPS): $38.52
Trailing 12-Month Earnings Per Share (EPS): $35.40
Average Earnings Per Share (EPS): $36.96
Dividend Per Share (DPS): $2
Payout Ratio: 6%
Dividend Yield: 1%
Since company Payout Ratio is less than 50, 2 points assigned.
Since Dividend Yield is less than 1, 0 point assigned.
This criteria used Company's Return On Equity (ROE%) to determine its fair value:
Using last 20 valid ROE years (max 20).Average ROE: 10.2%
Since Average ROE is between 10 - 20, 3 points assigned.
This criteria used Company's current price to its 52 week low price to determines its fair value:
Current Price: $332
52-Week Low: $261
Threshold Price (15% Above 52-Week Low): $300
Since Current price is not within 15% threshold, 0 point assigned.
This criteria used Company's Market Cap to determines its fair value:
Market Capitalization: $8,641 M
Since Market Cap is less than 10B, 1 point assigned.
% Exposure to Total Portfolio
Based on the market cap, we recommend do not exceed 2% exposure of Total Portfolio.
Warren Buffet's Owners' Earnings:
Latest Positive Owners' Earnings (FCF/Share) (2024-12-31): $2.72
Note: Many highly growing companies reinvest heavily back into the business,
so their Owners' Earnings may appear very low. In such cases, other criteria should
be considered to assess the company’s true worth.
Value-Trade has assigned 20 points to above Lithia Motors Inc (LAD) stock.
Last 19 Years Avg PE
14.06, Fair Value PE
15, Industry Based PE
12, Growth Based PE
16.35, RCFC Based PE
0.27, ROE Based PE
10.15, Risk-Free Anchored PE (25% MoS)
17.61. Based on these 7 values, average assigned is
12.21. Value-Trades has assined P/E value
12.21. An average (Current Year EPS + Next Year EPS) earning per share is
$36.96.
Fair value using multiple P/Es (blended): $451.10 (PE 12.21 × EPS $36.96)
So the Final Fair Value is: $451.10
Understanding the Value-Trades P/E Blend (click to expand)
▾
What goes into the blended P/E?
- 20-Year Avg P/E — Long-run market baseline; conservative anchor.
- Fair Value P/E — Score-based (cash, debt, sector, etc.).
- Industry P/E — Peer group norm.
- Growth-Based P/E — Uses tapered growth rates, floored at 15.
- RCFC-Based P/E — Maps cash conversion efficiency.
- ROE-Based P/E — Higher ROE supports higher multiples.
- Risk-Free Anchored P/E — Macro floor tied to 10y yield w/ MoS.
How it works
- Extreme values are clamped/filtered (IQR method).
- Anchors (20y avg, RCFC/ROE, risk-free) are always kept if valid.
- Final fair value = min(Blended PE × EPS, Avg PE × EPS).
P/E Reference Summary
Using EPS: $36.96
Using Owners' Earnings (Latest FCF/Share): $2.72
Note: Many highly growing companies reinvest heavily back into the business,
so their Owners' Earnings may appear very low. In such cases, other criteria should
be considered to assess the company’s true worth.
| Source |
P/E Ratio |
Implied Fair Value |
| Market (1 Yr Ago) | 11.92 | $440.56 |
| 19 Yrs Avg-PE | 14.06 | $519.66 |
| Value-Trades Assigned | 12.21 | $451.28 |
| Owners' Earnings × 19 Yrs Avg-PE | 14.06 | $38.24 |
