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ZYBERNO

Stock Report

Updated Aug 29, 2026

Lithia Motors, Inc. (LAD)

Consumer Discretionary • NYSE

$370.36

Lithia Motors Inc. is an American automotive retailer headquartered in Medford, Oregon, and one of the largest automotive retailers in the United States by revenue. The company operates approximately 300 dealerships representing over 40 brands across the United States and the United Kingdom (through its Jardine Motors acquisition), selling new and used vehicles, providing finance and insurance products, and performing after-sale services.

Professional Investment Analysis

ZYBERNO SCORE →

Is it a great business? Is it getting better?

33.0/100

WEAK BUSINESS

Lithia Motors, Inc. (LAD) scores 33/100 — weak fundamentals with mixed indicators requiring careful analysis before acting.

📊 How is the Zyberno Score calculated? +

The Zyberno Score answers one question: "Is this a quality business worth owning?" It's a 0-100 investment grade that evaluates business fundamentals across four critical dimensions, based on principles from Warren Buffett, Benjamin Graham, Peter Lynch, and Charlie Munger.

The 4 Core Categories (25 points each):

1. PROFITABILITY (25 pts)

Metrics: ROE, ROIC, Net Margin, Operating Margin
Thresholds: ROE >20% excellent • ROIC >20% excellent • Net Margin >20% excellent • Operating Margin >25% excellent

2. FINANCIAL STRENGTH (25 pts)

Metrics: Debt-to-Equity, Current Ratio, Interest Coverage, Altman Z-Score
Thresholds: D/E <0.3 excellent • Current Ratio >2.5 excellent • Interest Coverage >10x excellent • Altman Z >3.0 safe

3. CASH FLOW QUALITY (25 pts)

Metrics: Free Cash Flow, OCF vs Net Income, FCF Margin
Thresholds: Positive & growing FCF excellent • OCF/NI >1.2x excellent (cash earnings exceed accounting)

4. GROWTH & CONSISTENCY (25 pts)

Metrics: Revenue Growth, Net Income Growth, FCF Growth, Piotroski F-Score
Thresholds: Growth via log-linear regression • Piotroski 8-9 excellent, 6-7 good

Score Interpretation:

75-100

GREAT BUSINESS

65-74

GOOD BUSINESS

50-64

AVERAGE BUSINESS

30-49

WEAK BUSINESS

0-29

POOR BUSINESS

→ View full LAD quality analysis & detailed breakdown

VALUATION SIGNAL

MARGIN OF SAFETY

Is this stock cheap or expensive relative to what the business has historically generated for owners?

Margin of Safety unavailable — insufficient data for the owner-earnings DCF.

BRINA GAP ↗

Is the market underestimating or overestimating what this business is capable of going forward?

+16.1%

Market Underestimates

💰 How is Margin of Safety calculated? +

Margin of Safety measures how much discount or premium you're paying relative to a stock's intrinsic value. It's Benjamin Graham's core principle: the larger the margin, the lower your downside risk.

Formula: (Intrinsic Value − Current Price) ÷ Intrinsic Value × 100%

How We Calculate Intrinsic Value (DCF Method):

Step 1: Calculate current Owner Earnings (OCF − Maintenance CapEx)

Step 2: Calculate company-specific growth rate using log-linear regression on 16 quarters of Owner Earnings

Step 3: Project 10 years forward using the calculated growth rate

Step 4: Discount each year's cash flow to present value using 10% discount rate

Step 5: Calculate terminal value using 3% perpetual growth rate

Step 6: Sum all discounted cash flows = Intrinsic Value

What The Percentages Mean:

+50% or more

EXCELLENT — Very undervalued

+25% to +50%

GOOD — Attractive discount

0% to +25%

FAIR — Reasonable value

0% to -25%

CAUTION — Slight premium

-25% or worse

POOR — Overvalued

"Price is what you pay, value is what you get." — Warren Buffett

→ View full LAD valuation analysis · → View full LAD Brina Gap analysis

📈 How is Brina Gap calculated? +

Brina Gap measures the difference between the growth a business can fundamentally sustain and the growth the market is already pricing in.

Formula: Fundamental Growth Rate − Market-Implied Growth Rate

The Two Components:

Fundamental Growth Rate = ROIC × Reinvestment Rate

What the business can sustainably grow at based on how much it reinvests and what return it earns on that capital. Grounded in historical financials.

Market-Implied Growth Rate = Reverse DCF

The growth rate the current Enterprise Value implicitly assumes. Calculated by back-solving a 10-year DCF model (10% WACC, 3% terminal growth) until the present value of projected cash flows equals EV.

What The Gap Means:

Gap > +5% Market Underestimates — potential upside

+2% to +5% Slight Underestimate

-2% to +2% Fairly Priced — market consensus matches fundamentals

-5% to -2% Slight Overestimate

Gap < -5% Market Overestimates — price embeds optimism fundamentals don't support

A positive gap (market underestimates) combined with a positive Margin of Safety is the strongest combined signal — the business is both cheap historically and forward economics are stronger than the price suggests.

Critical Financial Health Indicators

Return on Equity (Profitability):AVERAGE (10.9%)

Debt-to-Equity (Solvency Risk):EXCELLENT (0.15x)

Operating Margin (Operational Efficiency):POOR (4.1%)

Return on Capital (Capital Efficiency):GOOD (16.4%)

📊 Valuation Trilogy

Three interconnected metrics for complete valuation analysis

Click any metric for full methodology and detailed analysis

Zyberno's Verdict

Lithia Motors, Inc. (LAD) stock report — Zyberno Score 33/100 (WEAK BUSINESS). Full financial analysis on Zyberno.

According to Zyberno's DCF model, Lithia Motors, Inc. (LAD) shows a Brina Gap of +16.1%, which strengthens the case: based on the company's ROIC (16.4%) and reinvestment rate (62.6%), the business can fundamentally grow at 10.3% — but the current enterprise value implies the market expects -5.8%.

Over the trailing twelve months, LAD generated -$405.70M in Owner Earnings. Capital was deployed as follows: $297.00M returned via share buybacks, $54.20M paid as dividends, $379.30M invested in capital expenditures. Reinvestment rate: 62.6%.

DIVISION I: EXECUTIVE SUMMARY

A. Market Valuation

Market Price & Capitalization (2)

Current Price:370.36

Market Cap:$8.33B

Valuation Multiples (4)

P/E Ratio:

12.21x

📊 Click to view full LAD P/E analysis →

P/B Ratio:1.30x

P/S Ratio:0.22x

Peg Ratio:-999.00x

Enterprise Metrics (2)

Enterprise Value:$8.90B

Ev Ebitda Ratio:4.76x

Price Action & Momentum (3)

12-1 Momentum:

+19.3% (26th pctile)

📈 Click to view full LAD Momentum analysis →

Momentum Percentile:26 / 100

% of 52-Week High:84.3%

B. Profitability Assessment

Return Metrics (7)

ROE:

10.9%

📊 Click to view full LAD ROE analysis →

ROA:2.8%

Roic:

16.4%

📊 Click to view full LAD ROIC analysis →

Reinvestment Rate:62.6%

Fundamental Growth Rate (g):10.3%

Market-Implied Growth Rate:-5.8%

Brina Gap:

16.1%

☷ Click to view full LAD Brina Gap analysis →

Margin Analysis (3)

Operating Margin Ttm:4.1%

Net Margin Ttm:1.9%

Ebitda Margin:4.9%

TTM Performance (3)

Gross Margin Ttm:15.2%

Operating Margin Ttm:4.1%

Net Margin Ttm:1.9%

Yield Metrics (2)

Earnings Yield:$8.19

Dividend Yield:0.7%

C. Log-Linear Regression Growth Trends

Earnings Surprise (SUE) (3)

Earnings Surprise (SUE):

+1.34

📊 Click to view full LAD Earnings Surprise analysis →

EPS Surprise vs Expected:28.0%

Latest Earnings Filed:2026-07-29

Revenue Growth (Linear) (1)

Revenue Growth Rate (Linear):9.2%

Earnings Growth (Linear) (1)

Net Income Growth Rate (Linear):-12.8%

Cash Flow Growth (Linear) (2)

Free Cash Flow Growth Rate (Linear):-23.5%

Operating Cash Flow Growth Rate (Linear):-41.9%

Operating Growth (Linear) (1)

Operating Income Growth Rate (Linear):-3.2%

D. Financial Stability

Liquidity Ratios (3)

Current Ratio:1.00x

Quick Ratio:0.21x

Cash Ratio:0.01x

Leverage Analysis (3)

Debt To Equity Ttm:0.15x

Debt-to-Equity Ratio:0.15x

Debt To Ebitda:0.36x

Coverage Ratios (2)

Interest Coverage Ratio:5.77x

Times Interest Earned:5.77

Capital Structure (4)

Working Capital:24,400,000.00

Cash And Cash Equivalents:110,300,000.00

Long Term Debt:$650.60M

Net Debt:$565.10M

DIVISION II: FINANCIAL STATEMENTS ANALYSIS

A. Income Statement Analysis

Revenue Components (2)

Revenue TTM: $37.94B

Linear Growth: 9.2%

📊 Click to view full LAD Revenue analysis & methodology →

Cost Of Revenue Ttm:$32.18B

Profitability Breakdown (2)

Gross profit TTM: $5.76B

Linear Growth: 4.3%

📊 Click to view full LAD Gross Profit analysis & methodology →

Operating income TTM: $1.55B

Linear Growth: -3.2%

📊 Click to view full LAD Operating Income analysis & methodology →

Bottom Line Performance (3)

Net income TTM: $714.40M

Linear Growth: -12.8%

📊 Click to view full LAD Net Income analysis & methodology →

Income Before Tax:$965.90M

Ebitda Ttm:1,869,900,000.00

Operating Expenses (5)

Operating Expenses:0.00

R And D Expense:0.00

Sga Expense:4,029,400,000.00

Income Tax Expense:$245.80M

Interest Expense:276,300,000.00

Expense Ratios (3)

R And D To Revenue Percentage:0.0%

Sga To Revenue Percentage:41.2%

Ebitda Margin:4.9%

B. Balance Sheet Analysis

Asset Composition (5)

Total Assets:$26.25B

Current Assets:$8.27B

Ppe Net:0.00

Goodwill:2,538,800,000.00

Intangible Assets:$0.00

Liability Structure (4)

Total Liabilities:19,818,400,000.00

Current Liabilities:8,248,900,000.00

Long Term Debt:$650.60M

Short Term Debt:$24.80M

Equity & Capital (3)

Equity:$6.43B

Retained Earnings:$6.36B

Common Stock:125,000,000.00

Working Capital Items (3)

Accounts Receivable:1,124,900,000.00

Inventory:6,516,800,000.00

Accounts Payable:486,900,000.00

Special Items (2)

Contract Liabilities:629,000,000.00

Stock Based Compensation:12,100,000.00

C. Cash Flow Analysis

Operating Activities (2)

Operating cash flow TTM: -$73.80M

Linear Growth: -41.9%

Free cash flow TTM: -$453.10M

Linear Growth: -23.5%

📊 Click to view full LAD Free Cash Flow analysis & methodology →

Investment Activities (2)

Investing Cash Flow:-$240.50M

Capital Expenditures Ttm:379,300,000.00

Financing Activities (3)

Financing Cash Flow:$432.00M

Dividends Paid Ttm:54,200,000.00

Stock Repurchase:297,000,000.00

Capital Transactions (3)

Common Stock Issuance:5,800,000.00

Long Term Debt Issuance:$786.80M

Long Term Debt Repayments:$0.00

Non-Cash Items (1)

Depreciation Amortization Ttm:322,700,000.00

DIVISION III: OPERATIONAL METRICS

A. Per Share Analysis

Earnings Per Share (3)

EPS (Basic TTM):30.38

Eps diluted TTM: $30.33

Linear Growth: -8.3%

📊 Click to view full LAD EPS analysis & methodology →

Earnings Per Share Ttm:$31.75

Revenue & Cash Per Share (2)

Sales Per Share Ttm:1,686.06

Operating Cash Flow Per Share:$15.85

Book Value & Capital (2)

Book Value Per Share:$285.66

Cash Per Share:4.90

Dividend Policy (1)

Dividend Payout Ratio:8.42x

B. Operational Efficiency

Asset Utilization (2)

Asset Turnover Ttm:1.49x

Working Capital Turnover Ttm:1,554.77x

Receivables Management (2)

Receivables Turnover Ttm:33.72x

Days Sales Outstanding Ttm:10.82

Inventory Management (2)

Inventory Turnover Ttm:4.94x

Days Inventory Outstanding Ttm:73.92

Payables & Cash Cycle (2)

Days Payable Outstanding:5.52

Cash Conversion Cycle:79.22

C. Quality & Risk Metrics

Financial Quality Scores (2)

Financial Strength Score:80.00

Quality Score:70.00

Market Metrics (2)

Beta:0.00x

Volatility Category:unknown

DIVISION IV: INVESTMENT ANALYSIS

A. Value Investment Framework

Owner Earnings Analysis (1)

-$405.70M

Damodaran Growth Analysis (4)

Reinvestment Rate:62.6%

Fundamental Growth Rate (g):10.3%

Market-Implied Growth Rate:-5.8%

Brina Gap:

16.1%

☷ Click to view full LAD Brina Gap analysis →

B. Log-Linear Regression Growth Analysis

Growth Rates (Log-Linear Regression) (3)

Revenue Growth Rate (Linear):9.2%

Net Income Growth Rate (Linear):-12.8%

Operating Income Growth Rate (Linear):-3.2%

Cash Flow Growth Rates (2)

Free Cash Flow Growth Rate (Linear):-23.5%

Operating Cash Flow Growth Rate (Linear):-41.9%

Other Growth Rates (2)

Gross Profit Growth Rate (Linear):4.3%

Book Value Growth Rate (Linear):8.0%

C. Company Profile & Context

Corporate Information (6)

Symbol:LAD

Company Name:Lithia Motors, Inc.

Sector:Consumer Discretionary

Industry:Retail-Auto Dealers & Gasoline Stations

Exchange:NYSE

Country:United States

Market Classification (3)

Market Cap Category:N/A

Price Category:premium

Volume Category:N/A

Share Structure (3)

Shares Outstanding:22.50M

Shares Outstanding Basic:22.50M

Shares Outstanding Diluted:22.50M

Data Processing Info (3)

Processing Version:v3.0

Last Updated:2026-08-29 21:53:24 UTC

Data Timestamp:2026-08-29T21:53:24.789030