4Q Misses by a Penny; Raising 2018 on a Lower Tax Rate; Awaiting Closing of Stahlgruber
- 4Q17 (Dec) adjusted EPS was 41 cents (vs 35 cents last year), up 17% YoY, but a penny below our forecast as greater-than-anticipated revenue was more than offset by added costs to support growth in North America and higher expenses in Europe;
- Full year 2017 adjusted EPS rose 11% to a record $1.88 (vs $1.69 in 2016);
- Our 2018 EPS estimate is now $2.32 (from $2.13, which was not adjusted for the new U.S. tax law), up 23% from our 2017 projection, aided by a lower tax rate and excluding the pending acquisition of Stahlgruber (expected to close in 2Q18), which we estimate could add 8 cents-to-12 cents for the year, depending on the timing of closing;
- For 2019, we are introducing an EPS estimate of $2.58, up 12% from our 2018 projection, excluding Stahlgruber (which could add an additional 12 cents-to-15 cents).
LKQ is a holding company. Through its subsidiaries, the company provides alternative vehicle collision replacement products and alternative vehicle mechanical replacement products. The company is also a provider of alternative vehicle replacement and maintenance products in the United Kingdom, Germany, the Benelux region (Belgium, Netherlands, and Luxembourg), Italy, Czech Republic, Poland, Slovakia, Austria, and other European countries. In addition to its wholesale operations, the company operates self service retail facilities across the United States that sell recycled automotive products from end-of-life-vehicles. The company is also a distributor of specialty vehicle aftermarket equipment and accessories.
Great Lakes Review is located in Cleveland, Ohio, was founded in 1981 and became a division of Wellington Shields & Co. LLC in 2011. Great Lakes Review is a research boutique focused on the fundamentally-oriented investor seeking companies that dominate their respective specialty niche regardless of industry. The objective is to make money for the long-term by gradually accumulating a diversified portfolio from a universe of no more than 30 companies. Although short-term-oriented accounts will be alerted to trading opportunities, aggressive sell recommendations are triggered only by a deterioration in long-term fundamentals, not by short-term blips or investor fancy. Coverage of those names that lose their earnings momentum or earnings predictability may be dropped and replaced with more vital candidates.
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