LKQ Corp (LKQ) refurbishes old auto parts and sells them. The company has taken the junkyard business to a new level — it does a billion dollars in sales each quarter. I have a ton of respect for LKQ. It’s is a profitable company with a stock that grows around 20% a year.
Last quarter, with the stock having gone from $15 to $22 within a year, I was waiting for LKQ to pullback so we could get in. But the stock didn’t — it took off to $25 and now its overpriced.
One Year Chart
Here’s the recent one-year chart of LKQ. The stock had been sitting around $20 for a while until it took off after it posted earnings last month. I think it went higher because the company didn’t lower guidance (as it had the quarter earlier).
Note estimates show profit growth is set to pick up now, that could also be the reason the stock’s gone higher. Now at $25 LKQ is a little high.
Fair Value
From 2009-2011 LKQ had a median P/E of 18. Now that P/E is 23. I feel the stock is worth 20 times earnings or $21.
Sharek’s Take
I missed an opportunity to get LKQ at its Fair Value. Now profit growth is expected to climb and it may be a while until I get a chance to get in at $20 again. Still, at 23 times earnigns I think the stock’s too high to get in right now. Let’s sit and wait, but maybe look to get in at $20, $17 looks unachievable.
View the Earnings Table here.View the Ten Year Chart here.
