Shares of LKQ Corp (LKQ, Financial) experienced a significant decline of -11.61%, trading at $37.24. The drop was driven by disappointing first quarter 2025 financial results, where the company missed its full-year EBITDA guidance and reported lower-than-expected revenue.
This financial slump was reflected in a 6.5% decline in total revenue compared to the previous year. All business segments reported decreases in revenue ranging between 5% and 7%, primarily due to decreased demand and limited pricing power. Even the typically stable self-service segment saw a near 6% contraction.
Despite the current setback, LKQ's valuation metrics suggest potential for future recovery. The company trades at a price-to-earnings (PE) ratio of 14.21, which is close to its 3-year high, indicating potential overvaluation in the current market context. However, with a price-to-book (PB) ratio of 1.6 and relatively strong operating margins, there is a foundation for profitability.
The stock is considered significantly undervalued when compared to its intrinsic value, as indicated by a GF Value of $56.68. To explore the GF Value further, you can check the detailed analysis on LKQ's GF Value page.
Although LKQ is battling financial headwinds, its consistency in revenue per share and expanding operating margins are positive indicators. The company's Altman Z-Score of 2.84 suggests that it is under some financial stress but is not at an immediate risk of bankruptcy.
Investors should pay attention to future earnings reports for signs of recovery and assess how the company maneuvers through its current challenges. With a market capitalization of $9.63 billion and visibility in multiple international markets like the UK and Germany, LKQ remains a significant player in the auto parts distribution industry.
