LKQ - Embedded Expectations Analysis - 2021 09 22
LKQ Corporation (LKQ:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 15.7x Uniform P/E. At these levels, the market has bearish expectations for the firm, and management may be concerned about revenue growth, cash flow generation, and financing and sales costs.Specifically, management may lack confidence in their ability to sustain adjusted EPS and Specialty segment revenue growth, continue generating outstanding cash flow, and secure more car park-related acquisitions. In addition, they may have concerns about fluctuations in regional revenue and margin performance, particularly in Europe, and they may be overstating the positive impact of supply disruptions on pricing and the extent to which utilizing their revolving credit facility will lower borrowing costs. Finally, they may have concerns about higher COGS, their share repurchasing strategy, and the pandemic's impact on organic growth.
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.
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