More Cars Coming Off Warranty Will Help This Collision/Mechanical Repair Parts Leader
- The shares are 12% off their August 2016 record high of $36 and trade at 16.6x our 12-month forward EPS estimate, despite EPS projected up 11% in 2017 to a record $1.87 and a further 13% in 2018 to $2.12.
- LKQ is the only national alternative auto parts distributor for the collision and repair industry at 20x the size of its nearest competitor in alternative auto parts in North America, and 70% larger than #2 in Europe.
- Parts and services (95% of revenue) organic growth should improve in 2018 given robust new car sales over the last few years now entering LKQ’s “sweet spot” (3-to-10 years old), allowing for more salvage/aftermarket parts to become available.
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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