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Lithia (LAD) Buys Remaining John Eagle Dealerships in Texas

Lithia Motors, Inc. LAD recently announced the purchase of the remaining six John Eagle Dealerships located in Houston, TX. This acquisition adds $600 million to the company’s revenues by expanding its network. These six franchises will aid the company in supplying a wide range of vehicles to customers throughout the South-Central region in Texas.

The recent purchase is in addition to the four John Eagle dealerships that it had acquired on Aug 3, 2020. Those four purchases included John Eagle Honda of Dallas, Honda Cars of Rockwall, Howdy Honda of Austin and John Eagle Sports City Toyota. These 10 dealerships combined add $1.1 billion to the company’s annualized revenues and bring the company's network expansion to over $1.6 billion in revenues so far in 2020. These acquisitions were financed using free cash flows and existing on-balance sheet capacity.
 
The John Eagle acquisitions are likely to bolster Lithia’s presence in the South-Central region and expand its network in four of the top five metropolitan markets in the United States. The company’s plan to increase the reach and density of their network to serve customers more conveniently is well on track. Lithia Motor’s Driveway e-commerce digital home channel is likely to boost profitability and fuel growth prospects, going forward.

Lithia Motors is one of the leading automotive retailers of new and used vehicles, and related services in the United States. It offers tailored services complemented through its nationwide network. The buyout of the John Eagle Dealerships is in sync with the auto retailer’s proven success strategy of acquiring strong, high-performing franchises.

Lithia Motors sports a Zacks Rank #1 (Strong Buy). Inspite of the economic recession faced by the auto industry due to the coronavirus outbreak, the company performed extremely well in the second quarter of 2020 with earningsof $3.72 per share, up 26% from the year-ago level. Shares have surged 75.7% year to date, outperforming its industry’s rise of 12.8% over the same period.

Other Key Picks

Some other top-ranked stocks in the auto space include AutoNation Inc. AN, Group 1 Automotive Inc. GPI, and Sonic Automotive Inc. SAH, each sporting a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

AutoNation and Sonic Automotive have appreciated 19.6% and 44.7%, respectively, year to date, whereas Group 1 Automotive has declined 8.6% over the same period.

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AutoNation, Inc. (AN): Free Stock Analysis Report
 
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