Auto parts company LKQ(NASDAQ: LKQ) wasn't exactly driving its shareholders on the fast track to wealth these past few days. According to data compiled by S&P Global Market Intelligence, those shares fell by more than 10% in value over the course of the week. This was in the wake of the company's latest earnings report, which many considered to be disappointing.
LKQ posted a mixed third quarter
On Tuesday, LKQ published its third quarter results, revealing that it earned $3.6 billion in revenue. That figure was 15% higher on a year-over-year basis. When recent acquisitions and divestments are stripped out of the equation, however, that growth rate falls to 2%. As for profitability, according to non-GAAP (adjusted) standards, net income declined by 13% to $231 million, or $0.86 per share.
This meant a mixed quarter for LKQ. On one hand, that $3.6 billion on the top line beat the average analyst estimate of $3.47 billion. On the other, that per-share net income number was well short of the collective $0.97 prognosticator expectation.
That reflects the mixed fortunes experienced by the company during the period. It saw robust growth in its wholesale segment in both North America and Europe, with the former posting high margins.
However, LKQ quoted CO Dominick Zarone as saying that it also had to cope with "unusual, transitory items in Europe, continued softness in commodity prices, and difficult market conditions impacting our specialty and self service segments."
Reduced guidance
Another negative development is that LKQ reduced both its revenue and profitability guidance. It's now anticipating organic revenue growth for parts and services of 4.75% to 5.75%, where previously it was modeling a 6% to 7.5% improvement. The new adjusted per-share earnings estimate is $3.41 to $3.55; formerly this stood at $3.65 to $3.85.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends LKQ. The Motley Fool has a disclosure policy.
