GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Vehicles & Parts » Lithia Motors Inc (NYSE:LAD) » Definitions » Altman Z-Score

LAD (Lithia Motors) Altman Z-Score : 2.43 (As of Oct. 31, 2024)


View and export this data going back to 1996. Start your Free Trial

What is Lithia Motors Altman Z-Score?

The Altman Z-Score is a model designed to predict the likelihood of a company going bankrupt within the next two years. Created by American finance professor Edward Altman in 1968, the model is specifically designed for publicly traded manufacturing companies with assets greater than $1 million.

Warning Sign:

Altman Z-score of 2.44 is in the grey area. This implies that the company is under some kind of financial stress. If it is below 1.8, the company may face bankruptcy risk.

Lithia Motors has a Altman Z-Score of 2.43, indicating it is in Grey Zones. This implies that Lithia Motors is in some kind of financial stress. If it is below 1.81, the company may face bankrupcy risk.

The zones of discrimination were as such:

When Altman Z-Score <= 1.8, it is in Distress Zones.
When Altman Z-Score >= 3, it is in Safe Zones.
When Altman Z-Score is between 1.8 and 3, it is in Grey Zones.

The historical rank and industry rank for Lithia Motors's Altman Z-Score or its related term are showing as below:

LAD' s Altman Z-Score Range Over the Past 10 Years
Min: 2.31   Med: 3.34   Max: 3.95
Current: 2.44

During the past 13 years, Lithia Motors's highest Altman Z-Score was 3.95. The lowest was 2.31. And the median was 3.34.


Lithia Motors Altman Z-Score Historical Data

The historical data trend for Lithia Motors's Altman Z-Score can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Lithia Motors Altman Z-Score Chart

Lithia Motors Annual Data
Trend Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
Altman Z-Score
Get a 7-Day Free Trial Premium Member Only Premium Member Only 3.22 3.32 3.79 3.13 2.75

Lithia Motors Quarterly Data
Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23 Mar24 Jun24 Sep24
Altman Z-Score Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 2.85 2.75 2.42 2.31 2.41

Competitive Comparison of Lithia Motors's Altman Z-Score

For the Auto & Truck Dealerships subindustry, Lithia Motors's Altman Z-Score, along with its competitors' market caps and Altman Z-Score data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


Lithia Motors's Altman Z-Score Distribution in the Vehicles & Parts Industry

For the Vehicles & Parts industry and Consumer Cyclical sector, Lithia Motors's Altman Z-Score distribution charts can be found below:

* The bar in red indicates where Lithia Motors's Altman Z-Score falls into.



Lithia Motors Altman Z-Score Calculation

Altman Z-Score model is an accurate forecaster of failure up to two years prior to distress. It can be considered the assessment of the distress of industrial corporations.

Lithia Motors's Altman Z-Score for today is calculated with this formula:

Z=1.2*X1+1.4*X2+3.3*X3+0.6*X4+1.0*X5
=1.2*0.0528+1.4*0.2389+3.3*0.0669+0.6*0.5323+1.0*1.4913
=2.43

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency. GuruFocus does not calculate Altman Z-Score when X4 or X5 value is 0.

Trailing Twelve Months (TTM) ended in Sep. 2024:
Total Assets was $23,262 Mil.
Total Current Assets was $7,893 Mil.
Total Current Liabilities was $6,664 Mil.
Retained Earnings was $5,557 Mil.
Pre-Tax Income was 288.2 + 282.8 + 220.6 + 279.7 = $1,071 Mil.
Interest Expense was -192.3 + -137.8 + -172.1 + 17.5 = $-485 Mil.
Revenue was 9221 + 9231.8 + 8561.8 + 7674.3 = $34,689 Mil.
Market Cap (Today) was $8,853 Mil.
Total Liabilities was $16,633 Mil.

* Note that for stock reported semi-annually or annually, GuruFocus uses latest annual data as the TTM data.

X1=Working Capital/Total Assets
=(Total Current Assets - Total Current Liabilities)/Total Assets
=(7893.1 - 6664.1)/23261.5
=0.0528

X2=Retained Earnings/Total Assets
=5556.7/23261.5
=0.2389

X3=Earnings Before Interest and Taxes/Total Assets
=(Pre-Tax Income - Interest Expense)/Total Assets
=(1071.3 - -484.7)/23261.5
=0.0669

X4=Market Value Equity/Book Value of Total Liabilities
=Market Cap/Total Liabilities
=8853.394/16633.3
=0.5323

X5=Revenue/Total Assets
=34688.9/23261.5
=1.4913

The zones of discrimination were as such:

Distress Zones - 1.81 < Grey Zones < 2.99 - Safe Zones

Lithia Motors has a Altman Z-Score of 2.43 indicating it is in Grey Zones.

Study by Altman found that companies that are in Distress Zone have more than 80% of chances of bankruptcy in two years.


Lithia Motors  (NYSE:LAD) Altman Z-Score Explanation

X1: The Working Capital/Total Assets (WC/TA) ratio is a measure of the net liquid assets of the firm relative to the total capitalization. Working capital is defined as the difference between current assets and current liabilities. Ordinarily, a firm experiencing consistent operating losses will have shrinking current assets in relation to total assets. Altman found this one proved to be the most valuable liquidity ratio comparing with the current ratio and the quick ratio. This is however the least significant of the five factors.

X2: Retained Earnings/Total Assets: the RE/TA ratio measures the leverage of a firm. Retained earnings is the account which reports the total amount of reinvested earnings and/or losses of a firm over its entire life. Those firms with high RE, relative to TA, have financed their assets through retention of profits and have not utilized as much debt.

X3, Earnings Before Interest and Taxes/Total Assets (EBIT/TA): This ratio is a measure of the true productivity of the firm's assets, independent of any tax or leverage factors. Since a firm's ultimate existence is based on the earning power of its assets, this ratio appears to be particularly appropriate for studies dealing with corporate failure. This ratio continually outperforms other profitability measures, including cash flow.

X4, Market Value of Equity/Book Value of Total Liabilities (MVE/TL): The measure shows how much the firm's assets can decline in value (measured by market value of equity plus debt) before the liabilities exceed the assets and the firm becomes insolvent.

X5, Revenue/Total Assets (S/TA): The capital-turnover ratio is a standard financial ratio illustrating the sales generating ability of the firm's assets.

Read more about Altman Z-Score and the original research.


Be Aware

Altman Z-Score does not apply to financial companies.


Lithia Motors Altman Z-Score Related Terms

Thank you for viewing the detailed overview of Lithia Motors's Altman Z-Score provided by GuruFocus.com. Please click on the following links to see related term pages.


Lithia Motors Business Description

Traded in Other Exchanges
Address
150 N. Bartlett Street, Medford, OR, USA, 97501
Lithia Motors is a retailer of new and used vehicles and related services. The company offers over 50 brands of vehicles at nearly 500 stores globally across the US, Canada, and UK. The company has expanded largely through the acquisition of dealerships in smaller regional markets but now seeks to grow in any part of the US and we expect more deals over time in the US and, at times, abroad. Annual revenue in 2023 was $31 billion and we see over $50 billion possible in a few years. The US was 90% of 2023 revenue and the UK second at 6%, the latter should rise to around 20% with the 2024 Pendragon acquisition. In 2023, new-car sales were about 49% of total revenue. Lithia was founded in 1946, went public in 1996, and is the largest US auto dealer. It is based in Medford, Oregon.
Executives
Sidney B Deboer director, officer: Executive Chairman 234 VISTA ST., ASHLAND OR 97520
Louis Miramontes director 150 N. BARTLETT ST., MEDFORD OR 97501
Shauna Mcintyre director 150 N. BARTLETT STREET, MEDFORD OR 97501
Bryan B Deboer director, officer: Chief Executive officer 150 N. BARTLETT STREET, MEDFORD OR 97501
Tina Miller officer: VP, CAO & Principal Fin. Off. 150 N. BARTLETT ST., MEDFORD OR 97501
Chris Holzshu officer: Sr. Vice President & CFO 150 N. BARTLETT STREET, MEDFORD OR 97501
David Stork officer: Senior Vice President 150 N. BARTLETT STREET, MEDFORD OR 97501
George N Hines officer: SVP, Chief Tech. & Innov. Off. 150 N. BARTLETT ST., MEDFORD OR 97501
Loretz Congdon Stacy director C/O CORE-MARK HOLDING CO. INC., 395 OYSTER POINT BLVD., SUITE 415, SOUTH SAN FRANCISCO CA 94080
Gary M Glandon officer: Chief People Officer C/O LITHIA MOTORS, INC., 150 NORTH BARTLETT STREET, MEDFORD OR 97501
James E. Lentz director C/O LITHIA MOTORS INC., 150 NORTH BARTLETT STREET, MEDFORD OR 97501
Scott Hillier officer: Sr. VP of Operations 150 N. BARTLETT STREET, MEDFORD OR 97501
Kenneth E Roberts director 150 N. BARTLETT ST., MEDFORD OR 97501
Marguerite Celeste officer: Senior Vice President 150 N BARTLETT STREET, MEDFORD OR 97501
Susan O Cain director 150 NORTH BARTLETT STREET, MEDFORD OR 97501