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LKQ Corp (LKQ)
NASDAQ:LKQ
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LKQ
(NASDAQ:LKQ)
71Outperform
Positive Factors
Financial Performance
LKQ's Q4/24 financial results included adjusted EPS results that exceeded both analyst estimates and consensus expectations.
Shareholder Returns
LKQ Corporation returned over $150 million to shareholders, including $80 million in share repurchases and $78 million in dividends.
Negative Factors
Collision Repair Volumes
Slower-than-anticipated recovery in collision repair volumes and associated scale inefficiencies impacting EBITDA margins.
North America Revenue
North America revenue decreased by 6.9% to $1.37 billion, with a segment EBITDA decrease of 3.3%.
LKQ (LKQ) vs. S&P 500 (SPY)
Market Cap
$10.68B
Dividend Yield2.91%
Average Volume (3M)3.08M
Price to Earnings (P/E)15.8
Beta (1Y)0.52
Revenue Growth3.53%
EPS Growth-25.71%
CountryUS
Employees47,000
SectorConsumer Cyclical
Sector Strength61
IndustryAuto - Parts
Share Statistics
EPS (TTM)2.61
Shares Outstanding258,553,100
10 Day Avg. Volume2,798,730
30 Day Avg. Volume3,082,930
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.73
Price to Cash Flow (P/CF)11.10
P/FCF Ratio8.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$54.40Price Target Upside31.75% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
LKQ Business Overview & Revenue Model
Company DescriptionLKQ Corporation is a leading global provider of alternative and specialty parts to repair and accessorize automobiles and other vehicles. Headquartered in Chicago, Illinois, the company operates through various segments, including North America, Europe, and Specialty. LKQ offers a wide range of products including recycled OEM parts, aftermarket parts, refurbished parts, and specialty products, serving collision and mechanical automotive repair shops, new and used car dealerships, and consumers.
How the Company Makes MoneyLKQ Corporation makes money primarily through the sale of automotive parts and accessories. Its revenue streams are diversified across several segments: North America, Europe, and Specialty. In North America and Europe, LKQ generates income by providing recycled, aftermarket, and refurbished automotive parts to repair shops and dealerships, capitalizing on the cost-effectiveness of these alternatives to new OEM parts. The Specialty segment focuses on providing accessories and performance parts for classic, custom, and off-road vehicles. Additionally, LKQ benefits from strategic acquisitions and partnerships that expand its product offerings and market reach, contributing to its earnings. The company also leverages its extensive distribution network and efficient supply chain to enhance its profitability.
LKQ Financial Statement Overview
Summary
LKQ demonstrates solid financial performance with steady revenue growth and strong profitability margins. However, increased leverage and declining free cash flow growth pose potential risks. The company maintains a robust equity position, but reduced return on equity and higher debt levels could impact future financial flexibility.Income Statement
LKQ has shown consistent revenue growth, with a modest increase of 3.53% from 2023 to 2024. The gross profit margin remains strong, although slightly declining from previous years, indicating stable cost management. EBIT and EBITDA margins demonstrate robust profitability, though there's a noticeable decline in EBIT margin from 2023 to 2024. Net profit margin decreased, reflecting pressure on net income, possibly due to increased expenses or taxes.78
Positive
Balance Sheet
The balance sheet exhibits a healthy equity base with an equity ratio of approximately 40.27% in 2024, suggesting solid financial stability. The debt-to-equity ratio increased, indicating higher leverage and potential risk if earnings decline. Return on equity decreased to 11.39% in 2024, showing reduced profitability on shareholders' funds compared to prior years.72
Positive
Cash Flow
Operating cash flow remains strong, although it declined from 2023 to 2024, impacting free cash flow. The free cash flow to net income ratio is positive, but the free cash flow growth rate is negative, indicating less cash available for growth or debt reduction. The operating cash flow to net income ratio suggests good cash generation relative to net earnings.75
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 14.36B | 13.87B | 12.79B | 13.09B | 11.63B | Gross Profit |
| 5.61B | 5.58B | 5.22B | 5.32B | 4.59B | EBIT |
| 1.20B | 1.36B | 1.58B | 1.47B | 985.58M | EBITDA |
| 1.63B | 1.74B | 1.71B | 1.75B | 1.30B | Net Income Common Stockholders |
| 685.00M | 936.00M | 1.15B | 1.09B | 638.42M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 234.00M | 299.00M | 278.00M | 274.13M | 312.15M | Total Assets |
| 14.96B | 15.08B | 12.04B | 12.61B | 12.36B | Total Debt |
| 5.61B | 5.64B | 3.94B | 4.22B | 4.29B | Net Debt |
| 5.38B | 5.34B | 3.66B | 3.95B | 3.98B | Total Liabilities |
| 8.92B | 8.90B | 6.55B | 6.82B | 6.69B | Stockholders Equity |
| 6.02B | 6.17B | 5.45B | 5.77B | 5.66B |
| Cash Flow | Free Cash Flow | |||
| 810.00M | 998.00M | 1.03B | 1.07B | 1.27B | Operating Cash Flow |
| 1.12B | 1.36B | 1.25B | 1.37B | 1.44B | Investing Cash Flow |
| -406.00M | -2.44B | 172.00M | -418.76M | -165.89M | Financing Cash Flow |
| -746.00M | 1.10B | -1.39B | -985.13M | -1.51B |
LKQ Technical Analysis
Neutral
41.29
Price Trends
40.32
Positive
38.97
Positive
39.34
Positive
Market Momentum
0.44
Positive
63.73
Neutral
84.15
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LKQ, the sentiment is Neutral. The current price of 41.29 is below the 20-day moving average (MA) of 41.86, above the 50-day MA of 40.32, and above the 200-day MA of 39.34, indicating a neutral trend. The MACD of 0.44 indicates Positive momentum. The RSI at 63.73 is Neutral, neither overbought nor oversold. The STOCH value of 84.15 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for LKQ.
LKQ Risk Analysis
LKQ disclosed 37 risk factors in its most recent earnings report. LKQ reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
LKQ Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $3.54B | 18.85 | 15.44% | ― | 4.11% | 50.07% | |
71 Outperform | $10.68B | 15.79 | 11.33% | 2.91% | 3.53% | -25.71% | |
70 Outperform | $5.01B | 12.55 | 16.69% | 2.17% | 0.61% | -4.04% | |
67 Neutral | $7.35B | 10.35 | 50.69% | 1.19% | 6.26% | 12.62% | |
66 Neutral | $6.25B | 10.04 | 26.69% | 3.42% | -0.80% | 39.95% | |
62 Neutral | $5.69B | 17.22 | 6.46% | 1.70% | -11.10% | -46.32% | |
59 Neutral | $11.22B | 10.13 | -1.22% | 3.96% | 1.32% | -18.57% |
* Consumer Cyclical Sector Average
Performance Comparison
LKQ
LKQ
41.29
-8.72
-17.44%
ALSN
Allison Transmission Holdings
85.94
4.27
5.23%
ALV
Autoliv
80.69
-36.46
-31.12%
BWA
BorgWarner
25.89
-8.78
-25.32%
DORM
Dorman Products
115.85
20.03
20.90%
GNTX
Gentex
22.14
-13.33
-37.58%
LKQ Earnings Call Summary
Earnings Call Date: Feb 20, 2025 | % Change Since: 5.55% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted significant achievements in returning capital to shareholders and strong performance in the European segment with record EBITDA margins. However, challenges remain in the North American revenue decline and specialty segment, alongside uncertainties around tariffs and foreign exchange rates.Highlights
Capital Return to Shareholders
LKQ returned $678 million of capital to shareholders in 2024, including $360 million in share repurchases and $318 million in dividends.
European Segment Performance
Europe achieved a record Q4 segment EBITDA margin of 10.1%, marking the third consecutive quarter with double-digit margins and the highest level of segment EBITDA dollars on record.
Mega-Yard Expansion
Completed a mega-yard expansion in Crystal River, Florida, and began construction on two new mega-yards in Illinois and Washington, expected to open in 2026.
SKU Rationalization Progress in Europe
Reviewed 50% of product brands by the end of 2024, with plans to reduce stocking SKUs to 600,000 by 2027, enhancing procurement and operational efficiency.
Lowlights
North American Revenue Decline
North American revenue declined by 8.5% per day, larger than in previous quarters, due to non-recurring benefits and storm impacts.
Specialty Segment Challenges
Specialty segment posted a 7.3% decline in organic revenue per day due to soft demand and competitive pricing pressures.
Impact of Tariffs and Exchange Rates
Lower foreign exchange rates and tariff uncertainties are expected to continue impacting financial performance.
Company Guidance
During the call, LKQ Corporation provided guidance for 2025, detailing various metrics and financial expectations. The company anticipates organic parts and services revenue growth between 0% and 2%, with North American revenue expected to remain roughly flat on a per day basis. LKQ projects adjusted diluted EPS in the range of $3.40 to $3.70. The global tax rate is expected to stay comparable to 2024 at 27%. Free cash flow is forecasted to be between $750 million and $900 million. The company aims for a continued focus on capital allocation, returning capital to shareholders through share repurchases and dividends, and maintaining manageable debt levels, with a total leverage ratio of 2.3 times EBITDA. Europe is expected to maintain double-digit EBITDA margins, while North America is anticipated to have margins in the low-16% range. Specialty is projected to improve its segment EBITDA margins to around 7% to 8%.LKQ Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
LKQ Announces Board Appointments and Strategic Finance Committee
Positive
Feb 6, 2025
On February 5, 2025, LKQ Corporation announced a cooperation agreement with Ancora Catalyst Institutional, LP, Engine Capital, LP, and their affiliates, resulting in the appointment of Sue Gove and Michael Powell to its Board of Directors. The agreement led to the formation of a Finance Committee to guide the company’s capital allocation strategy and business portfolio. This strategic move, praised by LKQ’s Chairman, aims to enhance corporate governance and drive shareholder value, aligning with LKQ’s focus on operational excellence and business simplification.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.