We undertook the unenviable task of reading the proxy for every company under coverage (and one we don’t cover: TSLA).
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Using Return on Invested Capital as a lens, we take a look at which companies and sub-industries capture the highest returns within the automotive value chain. We calculate ROIC across 27 companies within industries including dealers, OEMs, parts suppliers, aftermarket retailers, and service providers.
LAD reported Q1 results today (04/25/18) before the open. Total revenue growth of 19% missed consensus of 20%, but beat our 18%. EPS of $2.07 also missed consensus/our $2.29. LAD held its 2018 annual revenue and EPS guidance despite the Q1 miss, and announced a pair of additional store acquisitions for Q2 to date. Shares were down 2% (vs. +0.5% SP 500).
LAD reported Q4 results today (2/15/2018) before the open. Total revenue growth of 17.9% met Consensus of 17.9% but above our 14.5%. Adjusted EPS of $2.15 was above consensus/our $2.09. LAD held its 2018 annual revenue guidance despite a few more deals and bumped its EPS less than expected given M&A and tax reform. Shares were down -6%.
Most of you cover 50 – 200 stocks and therefore don’t have the liberty of being as into the weeds on every name – that’s our job. To help you do yours, we have created a comprehensive, but chart-heavy, guide to our coverage that is meant to have shelf life and that can be referred back to when you are ready to dig more into our coverage.
The tax overhaul is adding a lot of complexity to fundamentals as investors and companies we speak with struggle to digest consensus expectations and current valuation metrics. We sifted through both Factset and Bloomberg estimates to calculate a bottoms-up consensus of ONLY analysts that have revised estimates on tax reform.
In our first tax reform note we studied numerous angles on tax reform. As a continuation, we are studying additional angles and also adjusting numbers and price targets (Exhibit 1). While we remain concerned of the long-term risk/reward of tax reform, near-term we expect consensus EPS revisions to occur as the rewards are easier to forecast than the risks.
After years of inflating asset prices via credit let’s unwind QE, raise interest rates, meddle in regional wars, reduce homeownership incentives, rush a radical tax overhaul including reducing corporate taxes, rebalance personal taxes, and expanding the fiscal deficit, all during a period of trough unemployment. Let’s just throw all of the economic models out, nothing can go wrong here, I’m psyched let’s go shoot some birds
CEO changes are often viewed as an investment catalyst for strategic change or as a risk to the status quo. We went back and tracked 85 CEO changes across Consumer Retail and Automotive companies looking to better understand stock performance before, after, and during these CEO changes. We show our full database in Exhibit 9,10 & 11.
LAD reported Q3 results today (10/25/17) before the open. Total revenue growth of 18.7% was above Consensus of 16.3% but below our 19.1%. Adjusted EPS of $2.18 was below both Consensus of $2.37 and our $2.39. LAD cut its annual guidance to $8.30 - $8.35 from $8.55 - $8.70 and also issued 2018 guidance of $9.25 below consensus of $9.37 and our $9.69. Shares were down -7%.
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