LKQ (LKQ) AI Stock Analysis

• Market Cap: $10.93B
• Dividend Yield: 2.86%
• Average Volume (3M): 2.36M
• Price to Earnings (P/E): 16.1
• Beta (1Y): 0.80
• Revenue Growth: 3.53%
• EPS Growth: -25.71%
• Country: US
• Employees: 49,000
• Sector: Consumer Cyclical
• Sector Strength: 53
• Industry: Vehicles
• EPS (TTM): 2.61
• Shares Outstanding: 259,154,800
• 10 Day Avg. Volume: 3,275,083
• 30 Day Avg. Volume: 2,357,028
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.76
• Price to Cash Flow (P/CF): 11.60
• P/FCF Ratio: 9.10
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $54.40
• Price Target Upside: 29.28% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5

LKQ's stock performance is supported by solid financials and positive technical indicators, but risks from increased leverage and declining free cash flow growth are notable. The stock is fairly valued with a reasonable dividend yield, while recent strategic corporate events may enhance long-term shareholder value. The earnings call reveals both strengths and challenges, impacting the overall outlook.

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

Demand Challenges

In 4Q24, LKQ continued to see headwinds from soft collision repair levels and weak Specialty segment demand.

LKQ Business Overview & Revenue Model

Company Description

LKQ 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 Money

LKQ 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.

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.

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.

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

• Technical Analysis Sentiment: Positive
• Last Price: 42.08
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LKQ, the sentiment is Positive. The current price of 42.08 is above the 20-day moving average (MA) of 39.65, above the 50-day MA of 38.26, and above the 200-day MA of 39.59, indicating a bullish trend. The MACD of 1.16 indicates Negative momentum. The RSI at 69.69 is Neutral, neither overbought nor oversold. The STOCH value of 78.95 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LKQ.

LKQ Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DORM	76 Outperform	$4.02B	21.35	14.69%	―	4.11%	50.07%
ORLY	72 Outperform	$77.71B	33.37	-174.09%	―	5.67%	5.40%
LKQ	71 Outperform	$10.93B	16.14	11.38%	2.86%	3.53%	-25.71%
AZO	71 Outperform	$58.30B	23.21	-14.95%	―	5.19%	8.31%
GPC	67 Neutral	$17.33B	19.29	20.84%	3.23%	1.71%	-30.78%
Sector *	60 Neutral	$13.01B	10.45	0.79%	3.53%	1.60%	-22.47%
AAP	45 Neutral	$2.21B	59.62	-15.47%	2.82%	-9.34%	-852.37%

LKQ Corporate Events

LKQ Announces Board Appointments and Strategic Finance Committee

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.

LKQ Corporation Appoints James Metcalf to Board

LKQ Corporation announced the appointment of James S. Metcalf as a new independent director to its Board, effective December 11, 2024, as part of its ongoing board refreshment strategy. This change comes as Dominick Zarcone has decided not to seek re-election and will retire from the Board in 2025, resulting in a Board of ten directors, nine of whom are independent. The addition of Metcalf, who brings extensive experience as a former public company CEO and board member, is expected to enhance the Board’s skills and oversight capabilities, contributing to long-term value creation for shareholders.