Lithia Motors Inc. (LAD): First Take: 2Q26 EPS beat driven by better-than-expected SG&A and finops; Used retail GPU +20%

First-page research excerpt

Equity Research

29 July 2026 | 8:11AM EDT

Lithia Motors Inc. (LAD): First Take: 2Q26 EPS beat driven by

better-than-expected SG&A and finops; Used retail GPU +20%

Lithia Motors reported 2Q26 adj. EPS of $10.03, above the GS/consensus (FactSet)

estimates of $8.80/$8.73, with the beat driven by (1) better-than-expected SG&A

and (2) a larger gain than expected from financing operations, which we note was

largely driven by a much lower provision expenses on both a y/y and q/q basis. Total

revenue increased 2.2% y/y to $9.791bn (vs. GS/consensus of $9.956bn/$9.639bn)

and same-store sales declined 1.6%, with new vehicles -1.5%, used vehicles -2.2%

(retail and wholesale), F&I -5.2%, and aftersales +1.0%. Gross margin decreased 20

bps y/y to 15.3% (vs. GS/consensus of 15.0%/15.5%), and we note same-store total

vehicle gross profit per unit decreased 2.4% y/y to $4,119 but increased from 1Q26’s

$3,928. Lithia’s adjusted SG&A-to-gross ratio increased 92 bps y/y to 68.6%, below

the GS estimate of 70.0% and consensus of 69.8%.

Bottom line: LAD’s 2Q beat was primarily driven by better-than-expected SG&A and

a larger gain than expected from financing operations, which we note reflects a

much lower provision expense on both a y/y and q/q basis. The company’s

SG&A-to-gross profit ratio increased, but to a much lesser extent than expected due

to the aforementioned SG&A beat, while gross profit was relatively in line with

expectations, but we note a significant sequential improvement in new retail GPU

likely reflecting LAD’s focus on segment profitability. We expect a positive reaction

to the print, particularly given the strong SG&A result, and expect questions to focus

on the company’s ability to maintain profit momentum going forward.

Mark Jordan, CFA

+1(617)772-7951 |

Goldman Sachs & Co. LLC

Kate McShane, CFA

+1(212)902-6740 |

Goldman Sachs & Co. LLC

Emily Ghosh

+1(713)658-2632 |

Goldman Sachs & Co. LLC

Nishi Agarwal

+1(332)245-7668 |

Goldman Sachs India SPL

Grace Chee

Goldman Sachs & Co. LLC

Samantha Chiang

+1(212)357-7992 |

Goldman Sachs & Co. LLC

Key Highlights

n Lithia reported a gain from financing operations of $36.5mn, well above the GS

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