Raising Rating to GRADUALLY ACCUMULATE (from Hold)
- 1Q18 (Mar) adjusted EPS was 55 cents (vs 49 cents last year), up 11% YoY but 5 cents below our forecast as a number of factors (many of which we believe are temporary) impacted sales and margins;
- Our 2018 EPS estimate (excluding the pending acquisition of Stahlgruber, which is expected to close in 2Q18) is now $2.22 (from $2.32), still up 19% from 2017;
- For 2019, our EPS estimate (excluding Stahlgruber) is now $2.48 (from $2.58), up 12% from our 2018 projection;
- With the shares trading for 13.3x our 12-month forward EPS estimate of $2.33, or 111% of their 3-to-5 year projected EPS growth rate of 12%, our rating is now GRADUALLY ACCUMULATE (from Hold), with a 12-month price target of $42.
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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