As the Q2 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the vehicle retailer industry, including Lithia (NYSE:LAD) and its peers.
Buying a vehicle is a big decision and usually the second-largest purchase behind a home for many people, so retailers that sell new and used cars try to offer selection, convenience, and customer service to shoppers. While there is online competition, especially for research and discovery, the vehicle sales market is still very fragmented and localized given the magnitude of the purchase and the logistical costs associated with moving cars over long distances. At the end of the day, a large swath of the population relies on cars to get from point A to point B, and vehicle sellers are acutely aware of this need.
The 4 vehicle retailer stocks we track reported a mixed Q2. As a group, revenues missed analysts’ consensus estimates by 0.5%.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 5.1% since the latest earnings results.
Lithia (NYSE:LAD)
With a strong presence in the Western US, Lithia Motors (NYSE:LAD) sells a wide range of vehicles, including new and used cars, trucks, SUVs, and luxury vehicles from various manufacturers.
Lithia reported revenues of $9.58 billion, up 3.8% year on year. This print fell short of analysts’ expectations by 2%, but it was still a strong quarter for the company with a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ gross margin estimates.
"Building on continued strength across our core operations, Lithia & Driveway's differentiated design once again powered record performance in the second quarter as we delivered a 25% year-over-year increase in diluted EPS. Operational excellence across the business translated into robust growth" said Bryan DeBoer, President and CEO.
Interestingly, the stock is up 9.9% since reporting and currently trades at $337.33.
Is now the time to buy Lithia? Access our full analysis of the earnings results here, it’s free.
Best Q2: Camping World (NYSE:CWH)
Founded in 1966 as a single recreational vehicle (RV) dealership, Camping World (NYSE:CWH) still sells RVs along with boats and general merchandise for outdoor activities.
Camping World reported revenues of $1.98 billion, up 9.4% year on year, outperforming analysts’ expectations by 5.2%. The business had a very strong quarter with an impressive beat of analysts’ EBITDA estimates.
Camping World scored the biggest analyst estimates beat and fastest revenue growth among its peers. However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $17.51.
Is now the time to buy Camping World? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: America's Car-Mart (NASDAQ:CRMT)
With a strong presence in the Southern and Central US, America’s Car-Mart (NASDAQ:CRMT) sells used cars to budget-conscious consumers.
America's Car-Mart reported revenues of $341.3 million, down 1.5% year on year, falling short of analysts’ expectations by 5%. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates.
America's Car-Mart delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 23.3% since the results and currently trades at $34.14.
Read our full analysis of America's Car-Mart’s results here.
CarMax (NYSE:KMX)
Known for its transparent, customer-centric approach and wide selection of vehicles, Carmax (NYSE:KMX) is the largest automotive retailer in the United States.
CarMax reported revenues of $7.55 billion, up 6.1% year on year. This number met analysts’ expectations. Overall, it was a very strong quarter as it also put up a solid beat of analysts’ EBITDA and gross margin estimates.
The stock is down 6.4% since reporting and currently trades at $60.20.
Read our full, actionable report on CarMax here, it’s free.
Market Update
Thanks to the Fed’s series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% in November), and a notable surge followed Donald Trump’s presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by potential trade policy changes and corporate tax discussions, which could impact business confidence and growth. The path forward holds both optimism and caution as new policies take shape.
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