Is LAD a high-quality business?

AlphaMadera's AlphaQuality grade scores Lithia Motors, Inc. on six pillars — profitability, capital efficiency, balance-sheet strength, growth durability, cash generation, and shareholder yield. The composite letter grade reflects how LAD compares to a Buffett-style quality bar.

What is Lithia Motors, Inc.'s AlphaQuality grade?

AlphaQuality assigns a letter grade (A through F) to LAD based on a six-pillar quantitative model. The live page shows the composite grade plus each pillar's individual score with the underlying metrics.

What makes LAD a quality stock?

AlphaQuality looks at return on capital, free-cash-flow margins, debt-to-equity, revenue stability, dividend and buyback policy, and operating-margin trend. Stocks scoring well across all six pillars earn higher grades — the methodology favors compounders over cyclicals.

LAD - Lithia Motors, Inc.

Price: -- -- | CONSENSUS: Buy DETAILS | PRICE TARGET: $383.75 DETAILS

AlphaQuality

Quantitative six-pillar business-quality grade

Platform & Compounding FCF

AlphaQuality — archetype-weighted quantitative grade

C- 46.3 / 100 composite

Composite Grade

Composite of six pillars weighted for platform & compounding fcf businesses. Purely quantitative — no stock price or analyst input.

Profitability

Weight: 25%

D 36.0

5yr Avg ROIC 6.4% 42/100
Operating Margin Trend -0.95 pp/yr 21/100

Capital Efficiency

Weight: 15%

A- 85.2

5yr Avg ROE 14.9% 80/100
5yr Share-Count CAGR -3.3% 96/100

Growth Quality

Weight: 25%

B- 64.2

5yr Revenue CAGR 13.3% 87/100
5yr EPS CAGR -3.0% 14/100
Revenue-Growth Years (5) 5/5 100/100

Cash Generation

Weight: 20%

F 17.9

5yr FCF Margin 0.4% 27/100
5yr FCF/NI Conversion 0.07x 7/100

Balance Sheet

Weight: 10%

F 22.5

Net Debt / EBITDA 6.23x 6/100
Interest Coverage (EBIT/Int) 2.42x 35/100
Altman Z-Score 1.87 37/100

Stability

Weight: 5%

C- 51.0

EPS Volatility (σ/μ) 0.62 21/100
Piotroski F-Score 5 56/100
Negative-Revenue Years (5) 0/5 100/100

3 of 3 gurus held; 3 trimmed.

Holders: 3
Avg Δ position: -63.2%
New buys: 0
Full exits: 0

Wood decreased -95%
Greenblatt decreased -79%
Cooperman decreased -15%

How this is calculated

AlphaQuality grades six pillars from 0-100 and weights each by archetype:

Profitability (25%) — 5yr Avg ROIC, Operating Margin Trend
Capital Efficiency (15%) — 5yr Avg ROE, 5yr Share-Count CAGR
Growth Quality (25%) — 5yr Revenue CAGR, 5yr EPS CAGR, Revenue-Growth Years (5)
Cash Generation (20%) — 5yr FCF Margin, 5yr FCF/NI Conversion
Balance Sheet (10%) — Net Debt / EBITDA, Interest Coverage (EBIT/Int), Altman Z-Score
Stability (5%) — EPS Volatility (σ/μ), Piotroski F-Score, Negative-Revenue Years (5)

We deliberately ignore stock price, analyst targets, and consensus ratings so the grade is suitable for backtesting forward returns. A minimum of 5 fiscal years of audited statements is required; distressed and highly leveraged infrastructure businesses are declared ungradable rather than forced into a numeric score.