Lkq Corp (NASDAQ: LKQ)

Sector: Consumer Cyclical Industry: Auto Parts CIK: 0001065696
Market Cap 8.59 Bn
P/B 1.31
P/E 12.32
P/S 0.62
ROIC (Qtr) 7.47
Div Yield % 4.49
Rev 1y % (Qtr) 1.33
Total Debt (Qtr) 5.51 Bn
Debt/Equity (Qtr) 0.84

About

Price action

Investment thesis

Bull case

  • Operating cash flow of 968M provides strong 27.66x coverage of stock compensation 35M, indicating sustainable incentive practices.
  • Robust free cash flow of 722M exceeds capital expenditure of 246M by 2.93x, indicating strong organic growth funding capability.
  • Operating cash flow of 968M provides exceptional 484x coverage of minority interest expenses 2M, showing strong core operations.
  • Retained earnings of 7.97B provide full 1.68x coverage of long-term debt 4.73B, indicating strong internal capital position.
  • Robust tangible asset base of 9.05B provides 4.24x coverage of working capital 2.13B, indicating strong operational backing.

Bear case

  • Operating cash flow of 968M barely covers its investment activities of (250M), with a coverage ratio of -3.87, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 289M against inventory of 3.32B, the 0.09 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 968M provides thin coverage of dividend payments of (312M) with a -3.10 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 289M provide limited coverage of acquisition spending of (12M), which is -24.08x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating earnings of 1.18B show weak coverage of depreciation charges of 418M, with a 2.82 ratio indicating high capital intensity and potential reinvestment needs.

Segments Breakdown of Revenue (2024)

Geographical Breakdown of Revenue (2024)

Peer comparison

Companies in the Auto Parts
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 ORLY O Reilly Automotive Inc 80.07 Bn 32.23 4.59 8.40 Bn
2 AZO Autozone Inc 57.24 Bn 23.23 2.97 12.05 Bn
3 APTV Aptiv PLC 19.67 Bn 66.67 0.98 8.03 Bn
4 GPC Genuine Parts Co 17.83 Bn 22.05 0.74 6.40 Bn
5 MGA Magna International Inc 15.86 Bn 15.36 0.38 7.48 Bn
6 ALV Autoliv Inc 9.72 Bn 12.92 0.92 2.19 Bn
7 MBLY Mobileye Global Inc. 9.47 Bn -28.17 4.88 0.00 Bn
8 BWA Borgwarner Inc 8.87 Bn 66.21 0.63 3.90 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.91 1.16
EV to Cash from Ops. EV/CFO 14.69 9.30
EV to Debt EV to Debt 2.58 34.64
EV to EBIT EV/EBIT 12.06 4.45
EV to EBITDA EV/EBITDA 9.11 7.40
EV to Free Cash Flow [EV/FCF] EV/FCF 19.70 17.25
EV to Market Cap EV to Market Cap 1.66 1.58
EV to Revenue EV/Rev 1.02 3.42
Price to Book Value [P/B] P/B 1.31 -0.33
Price to Earnings [P/E] P/E 12.32 11.70
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.23 1.64
Dividend Payout Ratio % Div Payout % (Qtr) 44.30 12.18
Dividend per Basic Share Div per Share (Qtr) 1.20 0.41
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 42.77 13.70
Interest Coverage Int. cover (Qtr) 4.79 -110.44
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 29.71 -13.49
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -18.13 27.17
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 1.96
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -1.87 5.41
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -2.01 -8.06
EBIT Growth (1y) % EBIT 1y % (Qtr) -3.52 -22.36
EBT Growth (1y) % EBT 1y % (Qtr) -3.62 -123.98
EPS Growth (1y) % EPS 1y % (Qtr) 0.74 -110.42
FCF Growth (1y) % FCF 1y % (Qtr) -3.48 24.26
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -3.11 16.01
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.89 0.92
Cash Payout Ratio Cash Payout (Qtr) 0.26 -0.25
Cash Ratio Cash Ratio (Qtr) 0.08 0.69
Current Ratio Curr Ratio (Qtr) 1.60 2.88
Debt to Equity Ratio Debt/Equity (Qtr) 0.84 0.22
Interest Cover Ratio Int Coverage (Qtr) 4.79 -110.44
Times Interest Earned Times Interest Earned (Qtr) 4.79 -110.44
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 11.40 -952.44
EBIT Margin % EBIT Margin % (Qtr) 8.44 -997.37
EBT Margin % EBT Margin % (Qtr) 6.68 -987.56
Gross Margin % Gross Margin % (Qtr) 39.10 -122.43
Net Profit Margin % Net Margin % (Qtr) 5.00 -979.78