| Stock (Symbol) | Stock Price | |
LKQ Corp. (LKQ) |
$27 |
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| Data is as of | Expected to Report | Sector |
August 18, 2014 |
Oct 29 – Nov 03 |
Food & Necessities |
| Sharek’s Take | ||
 LKQ’s numbers look great but the stock still isn’t rising. Profits jumped 31% last quarter, and estimates call for growth to average 28% the next four qtrs. Maybe it’s because LKQ’s profit margins have been eroding for years. Or that the company isn’t pricing used/rebuilt parts as good as it used to. On April 19th, the NY Post ran an article slamming LKQ stock, and with the stagnant price of the stock, I think this thesis may be more true than not. LKQ is expanding rapidly in Europe, mostly via aquisitions, and that’s dragging profit margins down some (but the growth is worth it). Sales grew 37%, with 28% growth coming from acquisitions and 7% organic growth (foreign exchange added 2%). Profit margins fell from 41% to 39% year-over-year. I’m in a wait-and-see mode with this stock. It’s got solid upside, but something may not be right here. Let’s see what happens. |
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| One-Year Chart | ||
 This one-year chart doesn’t look good, and what concerns me is auto parts store stocks have been rising all year. All the numbers here look good, everything is green, and the stock’s undervalued at 19 times earnings. |
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| Earnings Table | ||
 Sales grew 37% last quarter as profits increased 31%. This is solid growth for a stock selling for 19x earnings.LKQ met earnings estimates last quarter, no news here. Overall this is a rather boring report. Annual Profit Estimates have stayed consistent all year. Quarterly profit growth estimates show 28% profit growth coming the next 4 qtrs, and these were pretty-much what they were last qtr. |
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| Fair Value | ||
 Well, LKQ did sell for 18x earnings during the 2009-2011 period, so you could say this lower valuation is normal. I think the stock’s worth 24 times earnings and has solid upside this year and next. |
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| Ten-Year Chart | ||
 The ten-year chart shows profits have grown every year during the past decade — at least 20% per year. But what’s with the recent correction. Seems its gone on too long, and the chart’s sloping down at the end (not good). |
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| Power Ranking | Bottom Line | |
Growth Portfolio
19 of 24 |
LKQ seems like a solid value here, it’s got a 19 P/E and is expected to grow profits 28% over the next year. The stock’s undervalued and has solid upside. Still, something may be fishy here, as the NY Post pointed out, so don’t put a lot of eggs in this basket. LKQ is ranked 19th of 24 stocks in the Growth Portfolio Power Rankings. This stock isn’t for the Aggressive Growth Portfolio because it isn’t rising. |
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Aggressive Growth Portfolio
N/A |
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