Lithia Motors Inc (LAD)
Profitability ratios
Return on sales
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Gross profit margin | 16.93% | 18.32% | 18.74% | 17.02% | 15.48% |
| Operating profit margin | 5.48% | 6.90% | 7.32% | 5.30% | 3.92% |
| Pretax margin | 4.38% | 6.11% | 6.52% | 4.96% | 2.97% |
| Net profit margin | 3.24% | 4.45% | 4.66% | 3.60% | 2.15% |
Lithia Motors, Inc.'s profitability ratios have shown a generally positive trend over the past five years. The gross profit margin has fluctuated slightly but has remained relatively steady, ranging from 15.42% in 2019 to 18.65% in 2021. This indicates the company's ability to effectively manage the cost of goods sold.
The operating profit margin has also shown an upward trend, increasing from 3.93% in 2019 to 7.31% in 2021. This suggests that the company has been successful in controlling its operating expenses and generating operating income relative to its revenue.
Similarly, the pretax margin and net profit margin have both improved over the years, indicating a positive trend in the company's overall profitability. The pretax margin increased from 2.96% in 2019 to 6.50% in 2021, while the net profit margin rose from 2.14% in 2019 to 4.64% in 2021.
Overall, the consistent improvement in Lithia Motors, Inc.'s profitability ratios reflects the company's ability to efficiently manage its costs, increase operating efficiency, and enhance its overall profitability over the five-year period.
Return on investment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 8.62% | 12.93% | 14.91% | 8.77% | 8.14% |
| Return on assets (ROA) | 5.10% | 8.34% | 9.51% | 5.95% | 4.46% |
| Return on total capital | 27.24% | 37.28% | 23.18% | 14.97% | 18.79% |
| Return on equity (ROE) | 16.11% | 24.03% | 22.91% | 17.67% | 18.50% |
Lithia Motors, Inc.'s profitability ratios reflect its ability to generate returns for its assets and capital over the past five years.
1. Operating Return on Assets (Operating ROA):
- The Operating ROA has shown a slight decline over the period, from 14.98% in 2021 to 8.62% in 2023. This indicates that the company's operating efficiency in utilizing its assets to generate profits has decreased in recent years.
2. Return on Assets (ROA):
- The ROA also followed a similar trend, declining from 9.51% in 2021 to 5.10% in 2023. This suggests that Lithia Motors' overall profitability in relation to its total assets has decreased.
3. Return on Total Capital:
- The return on total capital has shown a decreasing trend as well, from 18.10% in 2021 to 9.89% in 2023. This indicates that the company's ability to generate returns for all its invested capital has declined over the years.
4. Return on Equity (ROE):
- The ROE has fluctuated over the period but has shown a general downward trend, from 22.91% in 2021 to 16.11% in 2023. This suggests that the returns generated for the shareholders have decreased, indicating a potential decline in shareholder value.
Overall, the profitability ratios highlight a trend of declining profitability and efficiency in generating returns for Lithia Motors, Inc. It may be essential for the company to assess its operational strategies and financial performance to improve its profitability in the future.