Definitive Analysis
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Lithia Motors, Inc. (LAD)

Company Dividend Discount ModelIndustry: Auto - DealershipsSector: Consumer Cyclical

Valuation Snapshot

Stable Growth$793.45 - $2,104.80$1,213.27
Multi-Stage$531.69 - $581.53$556.16
Blended Fair Value$884.71
Current Price$316.00
Upside179.97%
DecisionBuy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS15.41%13.50%2.131.991.701.461.101.041.041.000.910.75
YoY Growth--7.01%16.81%16.49%33.33%5.43%-0.36%4.36%10.00%20.75%25.46%
Dividend Yield--0.72%0.67%0.74%0.49%0.28%1.27%1.11%0.99%1.06%0.86%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)898.90
(-) Cash Dividends Paid (M)56.20
(=) Cash Retained (M)842.70
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)179.78112.3667.42
Cash Retained (M)842.70842.70842.70
(-) Cash Required (M)-179.78-112.36-67.42
(=) Excess Retained (M)662.92730.34775.28
(/) Shares Outstanding (M)26.5826.5826.58
(=) Excess Retained per Share24.9527.4829.17
LTM Dividend per Share2.112.112.11
(+) Excess Retained per Share24.9527.4829.17
(=) Adjusted Dividend27.0629.6031.29
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate5.50%6.50%7.50%
Fair Value$793.45$1,213.27$2,104.80
Upside / Downside151.09%283.95%566.08%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)898.90957.331,019.551,085.831,156.401,231.571,268.52
Payout Ratio6.25%23.00%39.75%56.50%73.25%90.00%92.50%
Projected Dividends (M)56.20220.20405.29613.50847.071,108.411,173.38

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate5.50%6.50%7.50%
Year 1 PV (M)199.94201.84203.73
Year 2 PV (M)334.14340.51346.93
Year 3 PV (M)459.28472.46485.89
Year 4 PV (M)575.79597.93620.71
Year 5 PV (M)684.12717.16751.47
PV of Terminal Value (M)11,876.3012,449.9313,045.52
Equity Value (M)14,129.5814,779.8415,454.26
Shares Outstanding (M)26.5826.5826.58
Fair Value$531.69$556.16$581.53
Upside / Downside68.26%76.00%84.03%

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