Automotive retailer Lithia Motors (NYSE: LAD) missed Wall Street’s revenue expectations in Q4 CY2025, with sales flat year on year at $9.20 billion. Its non-GAAP profit of $6.74 per share was 16.8% below analysts’ consensus estimates.

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Company Overview

With a strong presence in the Western US, Lithia Motors (NYSE: LAD) sells a wide range of vehicles, including new and used cars, trucks, SUVs, and luxury vehicles from various manufacturers.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.

With $37.63 billion in revenue over the past 12 months, Lithia is one of the larger companies in the consumer retail industry and benefits from a well-known brand that influences purchasing decisions.

As you can see below, Lithia grew its sales at a decent 10.1% compounded annual growth rate over the last three years as it opened new stores and expanded its reach.

This quarter, Lithia missed Wall Street’s estimates and reported a rather uninspiring 0.3% year-on-year revenue decline, generating $9.20 billion of revenue.

Looking ahead, sell-side analysts expect revenue to grow 4.6% over the next 12 months, a deceleration versus the last three years. We still think its growth trajectory is attractive given its scale and implies the market is baking in success for its products.

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Store Performance

Number of Stores

A retailer’s store count often determines how much revenue it can generate.

Lithia opened new stores at a rapid clip over the last two years, averaging 15% annual growth, much faster than the broader consumer retail sector.

When a retailer opens new stores, it usually means it’s investing for growth because demand is greater than supply, especially in areas where consumers may not have a store within reasonable driving distance.

Note that Lithia reports its store count intermittently, so some data points are missing in the chart below.

Same-Store Sales

The change in a company's store base only tells one side of the story. The other is the performance of its existing locations and e-commerce sales, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales provides a deeper understanding of this issue because it measures organic growth at brick-and-mortar shops for at least a year.

Lithia’s demand within its existing locations has barely increased over the last two years as its same-store sales were flat. Lithia should consider improving its foot traffic and efficiency before expanding its store base.

In the latest quarter, Lithia’s year on year same-store sales were flat. This performance was more or less in line with its historical levels.

Key Takeaways from Lithia’s Q4 Results

We struggled to find many positives in these results. Its EBITDA missed and its EPS fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 4% to $311.94 immediately after reporting.

The latest quarter from Lithia’s wasn’t that good. One earnings report doesn’t define a company’s quality, though, so let’s explore whether the stock is a buy at the current price. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).