Lithia Motors has grown revenue at a 5.3% compound annual rate over the past 4 quarters, expanding from $9.2B in Q4 2020 to $9.7B in the most recent quarter. Net income has grown 32.8% year-over-year to $682.7M in the latest quarter. Lithia's net margin has expanded from 7.94% to 7.0% over the same period. This robust revenue and earnings growth is primarily driven by Lithia's successful acquisition strategy. The company has aggressively expanded its footprint, adding 53 new dealership locations over the past year through a combination of tuck-in acquisitions and larger platform deals. Lithia's total asset base has grown 30.9% to $24.5B over the past 4 quarters, reflecting the capital required to fund this rapid expansion. Lithia has demonstrated a consistent ability to integrate acquired stores, drive operational improvements, and extract synergies. The company's financial performance has remained stable, suggesting the acquired stores are being seamlessly absorbed into Lithia's business model. Looking ahead, I expect Lithia to maintain its aggressive acquisition pace, leveraging its strong balance sheet and proven integration capabilities to continue expanding its dealership network. This should allow the company to sustain its current trajectory of 5.3% annual revenue growth and 32.8% annual earnings growth over the next 1-2 years. Lithia's consistent operational execution, stable margins, and visible growth runway make it an attractive investment opportunity in the auto retail space. The stock's current valuation of 8.5x forward earnings is reasonable given the company's impressive financial performance and growth profile.

Research these companies