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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Lkq Corporation (XNAS:LKQ) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
LKQ
Name:
LKQ CORPORATION (XNAS:LKQ)
Sector:
350.00M
Industry:
Auto Parts
CEO:
Mr. Dominick Zarcone
Total Employees:
46,000
Our Technological Advancement Rating
Our Rating:
B
Technological advancement compared to industry is 11.63% higher
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF LKQ CORPORATION(LKQ) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND AUTO PARTS INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
53.45
One Month Price Target:
$53.86
Six Month Price Target :
$55.94
Likely Price in One Year's Time:
Ticker:
$58.42
Likely Trading Range Today Under (Normal Volatility)
$53.24
Price Upper limit ($) :
$53.77
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$50.29
This week:
$46.39
This month :
$39.32
Other Primary facts
Market Cap:
14.67B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
274.39M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
22.01%
-19.25%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$68.10
$61.32
$38.80
$45.58
Medium risk (<10%) entry points
Buy Call
Sell Call
$59.11
Buy Put:
Sell Put:
$57.66
$47.77
$49.24
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
LKQ
Sharpe Ratio:
3.16%
Comparison:
LKQ, is amongst the top 20% stocks with highest risk-adjusted returns
Sharpe ratio is 222.83% higher than the industry
& ratio is 38.70% higher than the market/S&P 500 average
Average Returns/Yield of
LKQ
Daily returns:
0.10%
Weekly returns:
0.51%
Monthly returns:
2.03%
Yearly returns:
9.58%
Comparison of returns:
Average annual returns/yield (last 3 years) is 154.05% above industry average
Classification:
LKQ, is amongst the top 20% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.99
Statistical test of Returns:
LKQ has not yielded statistically significant higher returns when compared to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.93%
Weekly Volatility:
6.54%
Monthly Volatility:
13.09%
Yearly Volatility:
45.34%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.86%
Volatility in last five trading days has been -70.64% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-5.91%
Weekly VaR:
-13.21%
Monthly VaR:
-26.43%
How Much Can the price of
LKQ
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-22%
Worst case (decline):
-91.55%
This translates to price declining to:
$41.58
This translates to price declining to:
$4.51
Severe Crash Probability
Risk of crash in next 6/12 months: High (50-70%)
What is Value at Risk (VaR)?
Risk Fundamentals
LKQ is a 86.54% riskier investment compared to the market/S&P 500 & is 59.81% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is 3.73% above industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
LKQ
Beta in relation to market/S&P 500--1.38
Expected beta in 1 year's time:
0.929
Expected beta in 3 year's time:
1.314
Unlevered (debt free) Beta:
0.917
Beta in relation to Nasdaq (XNAS):
0.906
Beta in relation to all global stocks::
0.923
Beta Comparison & Analysis
Beta of competitors/peers::
1.237
Beta is 11.94% higher than peers
Average Industry Beta:
1.212
Beta is 14.22% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
16.60%
Sustainable growth rate is -14.19% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.117
Alpha is -723.25% below industry average alpha yield
Alpha is 745% higher than market/& is unsustainably high
Analysis of Cost of Capital of
LKQ
Equity cost of capital:
0.126
Equity cost of capital is 10.31% above industry mean WACC
Unlevered (without debt) cost of capital:
8.37%
Before-tax cost of debt:
1.53%
After-tax cost of debt:
1.21%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
1.21%
WACC is 1.54% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$48.35
Revenue growth rate per share of (3Y):
2.52
Annual revenue growth rate is -29.41% below industry average
EPS:
$3.74
Expected Annual growth rate of EPS (3Y):
27.64%
Expected future EPS growth rate is 301.12% higher than the Auto Parts industry
Free cash flow (FCF) per share:
$3.27
-
-
Debt per share
$14.00
EBITDA per share
$6.43
Valuation Analysis Today of
LKQ
P/E Ratio:
12.73
P/E Ratio of Competitors/Peers:
776.8
P/E ratio is -98.36% lower than main peers & is -40.39% lower than the industry
Stock price/value with industry average P/E ratio: $79.86
LKQ is -33.07% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $150.87
Present value of the expected future dividends only: $5.94
P/S (Price to Sales ratio):
1.11
Price to sales ratio is -51.71% below the industry mean
P/B (Price to book value ratio):
2.52
Price to free cash flow: 16.34
Price to free cash flow ratio is -24.38% lower than the industry
Net income growth rate (3Y):
142.98%
Net income growth rate is 285.10% higher than the average industry net income growth rate
Dividend Analysis
Dividend payout rate: 6.47%
Dividend yeild: 1.40%
Previous Dividend: $0.25
Previous adjusted dividend: $0.25
Previous Dividend: $0.75
-
-
Average dividend payment (long-term): $0.25
Average dividend increase/decrease (growth rate) % per period: 0.00%
Expected next dividend payment date: 31/08/2022
Expected next dividend record date: 17/08/2022
Expected next dividend declaration date: 25/07/2022
Previous dividend payment date: 06/02/2022
Previous dividend record date: 19/05/2022
Previous dividend declaration date: 26/04/2022
Dividend History:
2022-05-18--$0.25
2021-11-09--$0.25
--$0.00
2022-03-02--$0.25
--$0.00
--$0.00
-
In-depth Debt & Leverage Analysis
Debt to equity ratio:
66.41%
Net debt to equity ratio:
64.61%
Debt to assets ratio:
30.06%
Net debt to assets ratio:
29.25%
Debt-to-asset ratio is -42.67% below industry average
Ability to repay debt:
Interest coverage ratio:
28.45
Interest coverage ratio is -34.47% less than industry average
Looking forward:
Debt growth rate:
-1.55%
Annual debt growth is -106% lower than industry average debt growth rate
Debt repayment rate in last quarter: 8.18%
Analysis of Key Statistics
Correlation of price movement with the market:
0.693
Statistical significance of correlation:
LKQ has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.534
Stock price is 29.66% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.534
Correlation of price movement with Nasdaq (^IXIC):
0.028
Covariance of price movement with the market:
0.047
Kurtosis
13.891
Returns have severe fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are considerably more likely, compared to assets with normally distributed returns
Skewness of returns:
0.152
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
LKQ
Gross Profit Margin Ratio:
162%
Operating Profit Margin Ratio:
11.11%
Operating profit margin is 17.26% higher than the industry
Net Profit Margin Ratio:
162%
Effective Tax Rate:
23.30%
Effective tax rate is -2.78% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
18.98%
Return on equity (ROE) is -11.43% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
8.59%
Return on assets (ROA) is -6.23% lower than the industry
Financial Leverage:
1.4x
Current Ratio:
1.88
Current ratio is -6.40% below industry average
Cash Conversion Cycle (days):
6.4
Cash conversion cycle is -89.35% below industry average
The remaining useful life of property plant & equipment is: 13.9 years
Stock based compensation to net income ratio:
1.18%
In-depth Efficiency Analysis
Revenue generated per employee:
288.4K
Each employee generates -10% less revenue than industry average revenue per employee
EBITDA generated per employee:
38.3K
Each employee generates -38% less EBITDA than industry average revenue per employee
Profit generated per employee:
23.9K
Each employee generates -30% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
7.6K
Each employee generates 15% more free cash flow than industry average revenue per employee
Assets/Capital per employee
176.0K
Each employee generates 15% more free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
LKQ
Trip.com Group Limited (XNAS:TCOM)
OLAPLEX HOLDINGS, INC. (XNAS:OLPX)
CAESARS ENTERTAINMENT, INC. (XNAS:CZR)
LIBERTY MEDIA CORPORATION (XNAS:FWONA)
Hasbro, Inc. (XNAS:HAS)
POOL CORPORATION (XNAS:POOL)
ULTA BEAUTY, INC. (XNAS:ULTA)
H World Group Limited (XNAS:HTHT)
PELOTON INTERACTIVE, INC. (XNAS:PTON)
Current Analyst Ratings
Strong buy�29%
Buy�25%
Hold�4%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Strong buy
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
13.27B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
7.88B
5.39B
-
3.64B
3.64B
-
253.19M
3.90B
6.10M
62.01M
277.41M
1.76B
1.47B
1.10B
1.40B
326.62M
1.10B
Statement of Cash Flow
Date:
Period:
65.00M
Differed Income Tax :
-
Stock Based Compensation :
13.00M
Change in Working Capital :
62.00M
Accounts Receivables:
-
Other Working Capital:
81.00M
Other Non-Cash Items:
- 4000.00K
Net Cash Provided by Operating Activities:
409.00M
Investments in PP&E:
- 59000.00K
Net Acquisitions:
-
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
327.00M
-
327.00M
1.24B
2.57B
543.00M
4.68B
2.56B
4.43B
715.00M
179.00M
-
219.00M
8.10B
-
12.78B
1.37B
223.00M
-
-
902.00M
2.50B
3.84B
349.00M
4.46B
-
6.96B
3.00M
6.00B
- 206000.0K
-
March 31, 2022 at 6:00:00 AM
11.78B
5.78B
12.74B
-
4.06B
3.7B
-
- 4000.00K
- 63000.00K
- 342000.00K
-
- 144000.00K
- 71000.00K
279.00M
- 278000.00K
- 6000.00K
53.00M
327.00M
274.00M
409.00M
- 59000.00K
350.00M
Our Proprietary Portfolio Rating
Our Rating:
B
Price Forecast/Expected Price in Next 5 Years of
LKQ
2023
2024
2025
2026
2027
$58.71
$1,069.84
$1,169.38
$1,278.18
$1,397.11