Lithia Motors Intensifies Shareholder Returns Through Aggressive Buyback Strategy

Lithia Motors US5367971034

Shares of US automotive retailer Lithia Motors advanced 1.04% to close at $328.39 in Friday's trading session. This positive movement follows supportive analyst commentary from Citi and the company's confirmation of a significantly accelerated share repurchase initiative.

The affirming voice comes from Citi analyst Michael Ward, who reiterated a "Buy" rating on the stock over the weekend. This endorsement aligns with the firm's assertive capital allocation approach. The broader auto retail sector has recently faced headwinds, with Cox Automotive's latest dealer sentiment index for Q4 showing declining optimism due to high interest rates and normalizing inventory levels.

However, Lithia has demonstrated resilience. The company reported a third-quarter adjusted earnings per share (EPS) of $9.50, notably surpassing the consensus estimate of $8.53. The stock currently trades at approximately 9.5 times its projected annual earnings.

Share Repurchases Reach Record Levels

A central element of the current strategy is the rapid return of capital to shareholders. In a business update dated December 2, Lithia Motors confirmed it repurchased $274 million worth of its own stock in the current quarter alone. This activity equates to 3.3% of its outstanding shares.

Year-to-date, the total buyback volume has reached $933 million. Since the start of the year, the company has retired nearly 3 million shares, representing about 11.3% of its total share float. Under the existing authorization, an additional $636 million remains available for further repurchases.

Strategic Acquisitions Drive Revenue Growth

Alongside the aggressive buyback program, Lithia continues to pursue targeted growth via acquisitions. The company recently finalized two key purchases.

On December 2, Lithia announced the completion of its acquisition of Fines Ford in the Greater Toronto Area. This dealership is projected to generate roughly $100 million in annual revenue.

This follows a late-October transaction where Lithia purchased three Hyundai dealerships located in California's Orange County. The stores in Anaheim, Huntington Beach, and Garden Grove are estimated to contribute approximately $440 million in yearly revenue. Combined, these recent acquisitions add about $540 million in annualized sales to the corporation.

Outlook and Mathematical Advantage

By simultaneously driving revenue growth through acquisitions and reducing its share count by over 11%, Lithia is creating a mathematical tailwind for its per-share earnings in the coming year. The company's next comprehensive financial report is anticipated in February 2026.